Change in Federal Spending since 1962

We've discussed the tax increases and the federal deficit since we've been old enough to pay taxes, or worry about how the deficit will effect us. Everybody talks as if they know the cause of the problem. There are many myths regarding the Federal budget and deficit. These common budget myths include the following:

  • the military is the largest part of the budget
  • welfare programs are the largest part of the budget
  • the deficit was caused by Reagan's military excesses
  • the deficit was caused by Carter
  • Republicans cut spending and Democrats increase spending

Here, we will present some of the budget data since 1962, and let you look at the graphs and see which myths you believe may actually be true.

We start by classifying federal spending in three parts: administrative, military, and social-regulatory. Of course there is some overlap between all of these, but we work directly from the reported budget numbers.

Arrows have been added to show phases of rapid increase.
In 1962, when our graph starts, the military is the largest part of the budget. As America starts to withdraw from the Vietnam War military spending levels off while other spending increases. By 1972 the military ceases to be the largest part of the budget. The graph shows rapid increases in social regulatory spending under Johnson (D), Nixon (R), Bush (R)and GW Bush (R). Similarly, we see rapid increase in administrative costs (deficits) under Nixon, Bush, and GW Bush.
Budget Viewed By Percents
 
Viewing the budget as percent of total, we see that the fastest rise in the share given to the social regulatory part of the budget occurred during the Nixon-Ford (R) years. The fastest rise for the share given to administrative costs (primarily deficit) occurred during the Reagan (R) years. During the GWB years, the percentage graph is somewhat misleading. The apparent drop in social-regulatory spending occurs, not from regulatory spending decreasing, but from military spending rising much faster! The snapshots below show that most of the social-regulatory increase occurred before 1980, but the administrative increase is still occurring.

We should look at this with a little more detail though. In 1962, treasury costs make up most of the administrative costs (7.5% of total.) For social-regulatory costs, in 1962 support of business (12%) and social security (13%) almost tie for first place.

1962 - 1980:

  • Kennedy
  • Johnson
  • Nixon
  • Ford
  • Carter

1981 - 1992

  • Reagan
  • Bush

1993 - 2000

  • Clinton

2001 - 2008

  • GW Bush
the 2008 estimates do not include the cost of the bailout!

Between 1962 and 1980 the share spent on all three sectors of administrative costs nearly doubles. Large increases also went to welfare and social security. During the Reagan-Bush years the deficit rose rapidly, while business and education lost a share of support. Under Clinton the deficit stopped growing, while welfare and social security saw an increase in their share. During the GW Bush years, the share given to the deficit and to social security appear to decline. But remember, from above, the deficit and social spending rose rather rapidly during this time. Just, military spending rose much faster resulting in the deficit and regulatory costs receiving a smaller relative share.


From this data, now go back and think about the common myths regarding spending and the deficit. Which myths appear to be justified? Which appear doubtful?

Last modified June 22, 2009

For a more thorough analysis of this data see the inflation adjusted federal spending analysis. Or just check the charts of federal spending and deficits by president.

 

 

 

Related Pages
Federal Budget since 1901
Federal Income Tax in 1999
Tax Equity
Minimum Wage Alternative
Income Inequity
Federal Spending Trends
 

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