The Data


Spending, austerity, deficits - so many issues to keep track of.  

Succinctly put spending at the Federal level has increased at a 8% per year rate while the GDP has been less than 4% most years.   Is there any question as to what the issue is?   Welfare has been growing by 12% a year rate. 

The real increase in government spending has lead to Federal and State governments totaling over 40% of GDP in spending.  This range is unsustainable, as the economic output must be reduced to pay for this now or in the future. 


The Problem Is Spending, not Deficits


The video at the right gives some palatable array of data and arguments. 


The most important headline about the Ryan budget is that it limits the growth rate of federal spending, with outlays increasing by an average of 3.1% annually over the next 10 years. …limiting spending so it grows by 3.1% per year, as Mr. Ryan proposes, quickly leads to less red ink. This is because federal tax revenues are projected by the House Budget Committee to increase 6.6% annually over the next 10 years if the House budget is approved (and this assumes the Bush tax cuts are made permanent).


Raise taxes?  Since this historically has lead to a further stagnation of the economy along with the overwhelming reality that this will lead to even more spending historically. 


An interview on the size of the debt bomb and why this is of concern: the video at right.


Arthur Brooks writes as to how far along are we as Europe:

I'm often asked if I think America is trending toward becoming a European-style social democracy.


My answer is: "No, because we already are a European-style social democracy."  


From the progressivity of our tax code, to the percentage of GDP devoted to government, to the extent of the regulatory burden on business, most of Europe's got nothing on us.


In 1938—the year my organization, the American Enterprise Institute, was founded—total government spending at all levels was about 15% of GDP.   By 2010 it was 36%. The political right can crow all it wants about how America is a "conservative country," unlike, say, Spain—a country governed by the Spanish Socialist Workers Party for most of the past 30 years.


But at 36%, U.S. government spending relative to GDP is very close to Spain's. And our debt-to-GDP ratio is 103%; Spain's is 68%.



What you do in your private life to manage finances, and shouldn't this be applied to government?