Comparing government spending
Often it’s useful to look at where we’ve been to get some insight into where we might be going. N.C. State University economist Mike Walden gives a brief historical view on government spending.
“Well, let’s compare the year before I was born — I’ll give this away – 1950, to where we are today, and let’s look at government spending — and we’re combining state, local, and federal government spending — as a percent of our broad economy, what we call GDP.
“And we have seen dramatic changes. For example, the biggest change has probably been in the so-called entitlements area, the big three entitlements being Social Security, Medicare and Medicaid. In 1950, they counted for 3 percent of GDP. Today they’re up to 18 percent (and) expected to continue to go higher.
“Military spending: Although it has increased in dollar amount, it’s actually fallen in terms of percent of GDP. It’s much lower today than it was in the 1950s as well as ’60s and ’70s, depending on infrastructure.
“And government services has moved up a little bit: 1950, it was around 10 percent of GDP. Today, it’s about 13 percent of GDP.
“And then a lot of focus of course right now is interest on the national debt. And, of course, as a percent of the economy the national debt is much bigger than it was today. Interest on that national debt is actually one-third higher than it was in 1950, but very interesting … because of the declining interest rates, interest on the national debt today is actually one-half of what it was 20 years ago.”
Category: Economic Perspective