econscius

When $3.5 Trillion was $3.5 Billion!

In Economy, Federal Deficit, Government Spending on August 6, 2011 at 12:48 am

In Fiscal 2009, the US government spent $3.52 Trillion [1].

In Fiscal 1926, the US government spent $3.58 Billion ($43 Billion in 2009 Constant Dollars). [2] 

If a picture can be worth a thousand words, perhaps there is insight available when looking at page 317 of the 1947 Statistical Abstract of the United States (pictured below). 

Note federal spending actually contracted in the Roaring Twenties, even as the economy boomed.   We tamed the severe Depression of 1920-1 not with massive deficit spending stimulus but with spending cuts. [3]

Even FDR’s 1930s federal government lived in penury compared to today.   In 1940, last year before our entry to WWII, the United States spent merely $9.1 billion ($140 billion in 2009 Constant Dollars).

I am not implying we do not get some value for the additional trillions we spend each year today, but the questions are: (1) are we getting good value for the money and (2) can we afford it?  Tonight, S&P’s ratings downgrade suggests the answer to #2 is no.

Statistical Abstract of the United States, 1947, pg. 316

[1] http://www.cbo.gov/ftpdocs/120xx/doc12039/HistoricalTables%5B1%5D.pdf

[2] A useful Constant Dollar Calculator can be found, using your tax dollars by the way, at: http://data.bls.gov/cgi-bin/cpicalc.pl?cost1=3584988&year1=1926&year2=2011

[3] http://en.wikipedia.org/wiki/Depression_of_1920%E2%80%9321

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: