How Big is Bush's Big Government?
In the 2000 election, Bush II promised to shovel money into all sorts of programs — and he's kept that promise, writes Mark Brandly. In the first five years of the Bush regime, federal spending increased 45%. Federal government debt increased $553 billion in fiscal year 2005 alone. That's more than $1.5 billion of additional debt per day and over $1 million of borrowing per minute for every minute of the year. FULL ARTICLE
Comments (19)
Dr. Mark Thornton
Great article and very useful for teachers. I also warned people (before the election) that Bush was a misguided big spender and even the probability of a War in Iraq!
http://mises.org/daily/494
Published: April 18, 2006 9:05 AM
Paul Marks
As you know, normally government spending (whether of the Federal government or State and local level - or in total) is measured as a proportion of total income.
Whilst it is useful to quote the cash numbers (to remind people just how vast the increase has been) there is a chance that people will just get lost in the numbers.
If memory serves government (Federal, State and local) used to spend about 12% of national income (before the Depression) and now spends about about 36 or 37%.
The Federal government used to spend about 3% of total income, I do not remember what it spends now (but, at an informed guess I would say that it spends most of that 36 or 37% of total income).
As for the economic damage big government does. The collectivists will simply say that living standards were much lower when government was smaller and that, therefore, big government is good.
Of course the statists are wrong in claiming that living standards have gone up because of big government (just as the defenders of fractional reserve banking are wrong in claiming that long term economic development depends on "easy credit" - i.e. borrowing that is not financed by real savings), but (again as you know) one can not refute such people by shooting statistics at them.
Published: April 18, 2006 9:10 AM
Don B
Thanks, a powerful piece, simply stated.
So much is lost...People have no idea...
Published: April 18, 2006 9:32 AM
F L. Light
All states illiberal would become in large/
Extension, adding bureaus to their charge.
All powers of rule implacable control/
Would have who gain enforcements by the dole.
All powers of rule are not auspicious, set/
To lord it by their size and laws forget.
All powers of rule are not auspicious, set/
On rifer compass rougher in their threat.
All powers of rule are not auspicious, set/
By size to offer an illiberal threat.
Published: April 18, 2006 9:46 AM
Stefan Karlsson
Good article, except I think fiscal year 2001 (which stretched from October 2000 to September 2001)should be attributed to Clinton rather than Bush since it was Clinton who created it (together with Congress), while Bush had virtually no effect on it. Comparing fiscal year 2005 with fiscal year 2001 shows a 33% increase in 4 years. Adding the 8.5% increase of the first 6 months of fiscal 2006 however does indeed imply a 45% increase over 5 years.
Moreover, as I pointed out here, this increase is
understated because low interest rates have held down interest costs despite a soaring national debt. This however, seems to be partially reversing now with the recent increase in both short-term and long-term yields of U.S. government securities.
Published: April 18, 2006 9:48 AM
JS
This is a very helpful article. I was wondering if you had any public-choice reading recommendations that specifically talk about government growth, for principles of macro students? The typical principles textbook offers a half chapter in the micro section, separated from the macro section, so the link to fiscal profligacy and the growth of deficits & debt is lost. Many principles textbooks still (still) talk about Lerner's 1940s "functional finance" idea as a viable public policy option. Thanks.
Published: April 18, 2006 10:31 AM
billwald
Lying with statistics. Standard polemical tactic of ignoring the other side of the balance sheet. The people who are depending upon transfer payments to stay alive are not interested in the average cost on the other side of the balance sheet.
The only valid arguments should be about the efficiency and necessity of the services provided by the govt.
Published: April 18, 2006 11:44 AM
Curt Howland
Billwald, you are quite correct.
Since the services provided by government are never efficient and without exception un-needed, it turns into a division by x=>zero problem. There is no benefit to having a government, abolishing it can do nothing but good.
Published: April 18, 2006 12:17 PM
Olev
Looking at the debt clock, at http://www.brillig.com/debt_clock/ with the US debt at $8,424,519,024,293.33 (on Apr. 18, 2006 at GMT 9:33:50PM) and the population at 298,542,069, the typical family of 4 owes approximately $112,875.50. With the interest rate at 4.75% the annual interest payment is $5,361.59. That is about 1/3 of the money paid to the tax man. The debt to each family is increasing at $7,335.65 per year using the numbers in the article. If the interest is not paid, the total increase of the debt would be $12,697.23 per year. So each family would have yo pay the government $12,697.23 just for it to stay at zero!!! Now what about paying down the debt!!??
Published: April 18, 2006 5:00 PM
averros
To really judge the damage inflicted by the government one needs to look at the compound interest over the last 100 years.
If, in the absense of the government, efficiency of the economy is 10% greater (a conservative estimate, considering that it diverts more than 40% from each money cycle to generally unproductive activities), in 100 years the difference in the total wealth is 13000 times between free economy and the government-led economy. (Ultra-conservative 5% estimate still gives 130 times difference).
In other words, if 100 years ago the federal and state governments were disbanded, by now average Americans would have material wealth comparable to today's multimillionaires.
Even if that wealth was spread really unevenly (as leftist claim), the actual wealth of the poorest people would be much higher than today - by orders of magnitude.
Oh, and the richest 1% would be able to fund things like space colonization (that's where practically all mineral resources are), eradication of all infectuous diseases worldwide, development of clean energy sources and clean technological cycles, etc, etc, out of their personal money.
The collectivist sheepie do not have a slightest clue how much their irrational belief in the State costs them.
Published: April 18, 2006 6:35 PM
David White
Averros,
As we are a mere seven years from the 100th anniversary of the Federal Reserve and the income tax, I'd love to see your math in greater detail, the better to dramatize the horror that is to come as these twin abominations run their course.
Published: April 18, 2006 7:05 PM
averros
David - unfortunately, I do not see any way to make any reliable estimate of losses due to statism; "what is not visible" is not easily measureable.
So this guesstimate of mine is likely as good as one could get... (13000 is approx. 1.10^100, and 130 is approx. 1.05^100 - using the standard formula for interest compounding).
It is probably possibly to refine the estimate (by doing painstaking research on every historical activity of the government, finding comparable commercial alternatives at that time, and figuring out the difference, integrating the results over the time, etc) -- but this is a monumental undertaking, which I do not think anyone would be willing to spend years and years on.
Published: April 18, 2006 7:51 PM
Michael Blanchard
Well it should be possible to add up the obvious instances of destruction and compound those. For example, didn't the feds pay farmers to slaughter livestock and let them rot in the fields in the hopes of ending the depression (the livestock, not the farmers)?
Each cow was worth $X, so that destroyed capital would be worth 1.05^70 = 30X today.
Nobody in their right mind could argue it's good policy to destroy cows and let them rot in the fields while Americans were starving elsewhere.
If you stick to easy instances of obvious destruction that everyone agrees are bad, you could persuade quite a number of people to the evil of state control.
Published: April 18, 2006 8:56 PM
Keith Preston
The historical norm has been that Leviathan states continue to grow until they spend, inflate and militarize themselves into bankruptcy, decay and collapse. Think of Rome, Spain, the British Empire, the Soviets and many others. There is no reason to think the US will avoid a similar fate. It's sad but amusing to watch the "red state fascists" and "blue state commies" argue over peripheral controversies while the regime continues to run our entire civilization further into the ground.
Published: April 18, 2006 9:33 PM
Paul D
Averros: Brilliant.
Published: April 18, 2006 11:53 PM
steve
"...The people who are depending upon transfer payments to stay alive"
Come on billwald, you mean if we don't have our money confiscated by the government, people will die? With that type of hyperbole, you should consider running for office. You would do well.
Published: April 19, 2006 9:34 PM
Paul Joseph
A great article, stuff like this should become a hot mainstream discussion everywhere. When you made the scenario that government depredations have plausibly reduced a persons income from the potential $107,000 it could have been to the $28,850 it currently is, does that take into account the spending power of a dollar of this lower income? Does the depredation also reduce this spending power and further reduce the overall standard of living? It would be good to see a simple indicator that tries to show the overall reduction in the standard of living caused by these depredations. A good indicator is how many hours would a person need to work to subsist comfortably with and without the depredations. In my opionion the difference is slave time coerced or conned from people by the government. Other people (probably the erroneous majority) view a portion of this time contributed as a neccessary thing to preserve human freedoms and quality of life. Those of us who disagree get swept along by the tyranny of the majority and just have to fend for ourselves until there is a wider awakening. Like with communism, at some point even the blind man will eventually see when things get bad enough. Unfortunately the correction usually involves reducing the cancer of a bloated central authority, not systematically removing it (which has never been done). The reduced cancer always blooms again. The ongoing erroneous school of thought (the indespensible central authority) is probably the greatest impediment to sustainable progress for humanity.
Published: April 21, 2006 12:49 PM
ABM
Did you ever wonder...?
how the U S government managed to survive in the 121 years before there was an income tax? ..... and what all the income tax you pay is really used for?
what the Constitution means (Article I, sect 8, clause 5) when it says "Congress shall have the power to coin money and regulate the value thereof..."? ..... and yet the government seems to find it necessary to borrow money from the bankers?
why we have no Civil War debt, when all the later wars created "federal debt?" ..... and To whom does the government really owe this soon-to-reach 8 trillion dollars of "federal debt"?
why your parents or grandparents could buy a five-course dinner at a good steak house for less than a buck in 1940, while the same meal would cost you more than $20 today?..... or, even worse, how much that dinner will cost your own kids in 2020?
why the harder you work and save, the more behind you seem to get? ..... especially if your job may be taken over by someone in another country where labor is cheap, so your employer is moving its plant there, and closing its plant here?
why all the new "social" laws, like social security, medicare, head-start, child care, welfare, fair employment, and many more, which all sounded good when they were enacted, all seem to create enormous financial problems for Congress and local governments?..... and why no one in charge seems to know how to solve them?
why almost half of our kids live with only one parent?..... why street gangs ignore the law and openly sell drugs in major cities? ..... why the public schools are struggling to educate our children?..... yet some high school graduates can't read or do simple math?
in short ..... why so many things seem to be wrong with our country today, despite what we hear on the managed TV news? ..... so that old feeling of insecurity about the future keeps gnawing at you?
Published: April 24, 2006 10:14 AM
M E Hoffer
FDR said it best "Nothing in politics happens by accident."
Published: April 24, 2006 10:26 AM