Our Pathetic Federal Spending

Jared BernsteinAs regular readers of this site know: government spending as a percent of GDP has gone down each year the last three years. This, in fact, is the reason that we are very slowly crawling our way to economic recovery. It is an indictment of not just the Republicans but also the Democrats, who managed to get themselves completely diverted from our unemployment crisis to the supposed debt crisis when we can borrow for less than the rate of inflation. It is very sad.

Jared Bernstein provided the following graph a few days ago. It shows the decrease in the fractional GDP deficit with the red line. What may come as a bit of a surprise is the blue line that shows the deficit in actual dollars. It is up by 0.6%. I don’t yet know if those are inflation adjusted dollars. If they aren’t, then we haven’t even seen this small rise.

[Update: I contacted Jared Bernstein and he tells me that the numbers are nominal. So in fact, spending in inflation adjusted dollars has also decreased. Assuming 2% inflation in 2009 and 1% for the following years (it has been higher than this, so this is a lower bound) total federal spending is roughly 4.5% less than it was in 2009. Assuming the more reasonable 2% throughout would make it roughly 7.6% less. That’s three Sequesters! -FM]

Bernstein comments on the graph:

And no, I’m not bragging about this—I think those two lines partially explain why this recovery has been such a slog: we hit back hard against the recession in 2009 and GDP started growing in real terms shortly thereafter. But we stopped too soon, certainly before the recovery reached most households.
Federal Spending Time Series
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About Frank Moraes

Frank Moraes is a freelance writer and editor online and in print. He is educated as a scientist with a PhD in Atmospheric Physics. He has worked in climate science, remote sensing, throughout the computer industry, and as a college physics instructor. Find out more at About Frank Moraes.

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