Visualizing Government Expenditures

The chart below shows how the total of projected spending and total tax collections for the U.S. federal government are projected to change from the present through 2080 as a percent share of GDP [1]. The red-shaded area indicates periods where the MyGovCost calculator projects the federal budget will be in deficit, where the national debt obligation will increase. The purple-shaded area indicates the approximate portion of federal government spending that will be covered by its total tax collections.

This chart, more than any other, illustrates the central challenge facing Americans throughout the twenty-first century. So long as the red line indicating the government’s projected expenditures never falls below the level of the blue line indicating the government’s long-term average total tax collections, the U.S. government will run annual deficits for the foreseeable future. Worse, those deficits, after initially shrinking following the extraordinarily high level of spending that occurred in 2008 and 2009, will only grow greater over time, significantly adding to the national debt.

The next chart demonstrates how the U.S. national debt can be expected to grow through 2080 as a percent share of annual GDP. The vertical gray bar indicates approximately where the United States’ Total Public Debt Outstanding may be expected to grow to be more than 100% of annual GDP:

Left unchecked, the growth of federal government spending will lead the U.S. national debt, as a percentage share of GDP, to grow exponentially. Since GDP itself grows exponentially over time, this means that the U.S.’ national debt will be likely to grow faster than that exponential rate. In practical terms, that kind of imbalance describes an unsustainable economic bubble driven entirely by excessive government spending.

Compared to the fallout from the stock market bubble bursting in 2000 and the housing bubble in 2006, the consequences of that economic bubble bursting will be especially severe, with an exceptionally negative impact upon the potential of the people of the United States to realize genuine prosperity during their lifetimes.

Footnotes

[1] These expenditures are based upon the estimates provided by the White House’s Office of Management and Budget for discretionary expenditures and the Congressional Budget Office’s Long Term Outlook for mandatory expenditures. These estimates include Social Security, Medicare, Medicaid and Net Interest on the national debt.

Office of Management and Budget. Budget of the United States Government Fiscal Year 2011.
http://www.gpoaccess.gov/usbudget/fy11/pdf/hist.pdf. Accessed 30 August 2010.

Congressional Budget Office. The Long-Term Budget Outlook, June 2010.
http://www.cbo.gov/ftpdocs/115xx/doc11579/06-30-LTBO.pdf. Accessed 30 August 2010.