Trends in Federal Spending and the Deficit

Since all spending must be covered through taxes, any increase in spending is an increase in taxes. Thus, we can understand the tax burden the people must suffer by analyzing the government's spending.

Last Modified June 17 2009

Spending Trends since W.W.II.

To look at spending, we asked, "How much does the Federal Government spend per citizen each year?" To do this, we adjusted the data for inflation using the Consumer Price Index (CPI) to calibrate our numbers. The data revealed surprising results. From Truman through Bush Sr. federal spending rose about $115 per year per citizen. The annual change in spending never deviated very far from this linear trend. The person, or party, in office made little difference in spending.

After more than 40 years of nearly linear increase the pattern changed at the start of the Clinton administration. During this time, spending per person actually decreased! Under Clinton, Federal spending decreased roughly $18 per year per citizen. Tax payers were saving $166 per (man, woman, and child) over the spending before he started.

Under GW Bush that pattern reversed, leading to the fastest increase in spending since the beginning of W.W.II. Under Bush, federal spending increased by over $250 per year per citizen. Recall that the typical American family is 3 people. That means, under GW Bush, the average family's taxes are increased by over $750 per year (before the bailout.) In the first four years of GW Bush's administration, spending to increased by roughly $1000 per citizen, or more than $3000 for a family of three. As we will see below, this spending is being relegated to the next generation, at an alarming rate.

Notes:

Throughout this document "Y2K $" means the value of the dollar in the year 2000 as determined by the CPI.

Data Sources

Related Data

The Federal Deficit per Person

Here we look at the deficit per person. The deficit can be thought of as the taxes we should be paying to cover our own spending. The deficit can be though of as the taxes we dump on our children for benefits they will never receive.

Overall, the federal budget has been going deeper into the red since W.W.II. The only significant transition to a balanced budget occurred during the Clinton years. When Clinton left office the budget was balanced. Future generations were saving $400 per person on the cost of past debts. That amounts to a savings of more than $2000 per person over the deficits that existed when Clinton took office.

The worst plunge into deeper deficits occurred under GW. Bush. In just four years after GW Bush took office the deficit jumped to over $1600 per person, or about $4800 per year for each family of three. So, some future families will have to have their taxes raised this much to pay for benefits already paid out that they will not receive. That's an increase of more than $2300 per taxpayer, nearly $7000 for a family of three.

Observations:

It has been claimed by GW Bush and Reagan that tax cuts improve the economy. It has been claimed by GW Bush and FDR that increased spending will improve the economy. But during the Clinton years spending fell and taxes rose slightly while most economic indicators improved consistently for eight years. During the first three years of the GW Bush administration, spending increased at the fastest pace since 1942 and taxes dropped, while most economic indicators languished. The last 11 years of data clearly run counter to the theory.

By contrast, the largest spending increase during the Great Depression, America's worst economic crisis, was $222 per person in 1939. The average spending increase during the Great Depression was $85 per person. That's much less than the $250 to $309 spending increase per citizen per year under GW Bush.

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