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The Right Frame of Reference for Judging the Current Level of Federal Spending

Wednesday May 18th, 2011   •   Posted by Craig Eyermann at 9:38am PDT   •  

How does today’s U.S. federal government spending compare to the levels recorded before the recession?

That’s an important question to ask because a lot of politicians and bureaucrats have a pretty large stake in keeping federal spending at elevated levels. How elevated those current levels of spending are with respect to what was typically recorded in the ten years before the most recent recession began is the subject of our data visualization exercise today!

How Does Today's Level of Federal Government Spending Compare to the Pre-Recession Levels of Spending from 1998-2007?

In the chart above, we’ve shown the current (2011) level of federal spending for discretionary expenditures, such as Defense, Welfare and Miscellaneous Spending, in which we’ve covered all remaining discretionary expenditures, as a percent share of GDP. We’ve done the same for the big three “mandatory” expenditure categories of Social Security, Medicaid and Medicare, all of which can technically be controlled by Congressional action.

Against those current levels of spending, we’ve shown what the average level of federal government spending was for these expenditures as a percent share of GDP for the period from 1998 through 2007, in addition to indicating the full range of values recorded for each category during those ten years with the vertical black bars shown for each category.

The only expenditure category we’ve omitted from the chart above is Net Interest on the National Debt, since that’s really the only genuinely “mandatory” expenditure of the U.S. federal government. Failing to make these particular payments would place the United States into default, particularly for payments owed to foreign interests.

The period of 1998 through 2007 makes for a very nice comparison because it contains both a period of time in which the U.S. government ran budget surpluses (1998-2001), a period of recession with an extended period of recovery (2001-2003), and also a period of time where the government ran what were considered for the time to be record high budget deficits (2002-2007). Oh, and this period also includes the defense spending recorded for supporting two wars (Afghanistan and Iraq).

Oh for those days! We suppose a good question for those politicians seeking to keep the federal government’s spending so permanently high is why shouldn’t the U.S. go back to those levels of spending recorded from 1998 through 2007, which just about everybody else in the world would call “normal” or even “excessive” levels of spending for the U.S.?

Data Source

White House Office of Management and Budget. Budget of the U.S. Government, Historical Tables, Fiscal Year 2012, Tables 1.2 and 3.1. Accessed 17 May 2011.

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May 2011