While the solution to cutting spending is going to be tough, our spending problem is not hard to understand. Chart I shows federal spending as a percent of GDP from the Eisenhower administration through estimated numbers for fiscal 2012, which ended in September. The Eisenhower administration is a good starting point for post-war budgets because it is the first period of budgetary normality following World War II, demobilization, and the Korean War. Spending as a percent of GDP gives a crisp number which is comparable over long periods of time.
...Want to see something that will curl your hair? Chart II shows federal borrowing as a percentage of the federal tax revenues, meaning how much borrowing we are doing each year as compared to how much revenue we are raising from taxes.
...Want to see the effect of all this spending? Chart III shows the increase in gross federal debt (there is another calculation for federal debt, netting out the Social Security Trust Fund, which the government calls "debt held by the public," but we are not using that here).
Read it all here ...
- Obama Wants to Pick a Fight, Not Cut the Deficit (townhall.com)
- Debt Ceiling: Default Not at Issue, Federal Spending Is (heritage.org)
- Debt Star: Federal Debt Increased By 113% Since Q2 2008, But Real GDP Increased By Only 2.6%! (confoundedinterest.wordpress.com)
- Don't Borrow More Without Spending Less (nationalreview.com)
- Chart of the Week: Growth of Government Assistance Adds to National Debt (heritage.org)
- Chart of the Year: Entitlements and Interest Drive the Fiscal Crisis (heritage.org)