When teaching economics I sometimes find it beneficial to use government budget data to apply the lessons of economics to our current political circumstances. The students tend to be surprised at the size of our government, the amount of tax revenues that we "pay," and the amount of government debt. The following numbers get the point across.

We, in the United States, live under the rule of the largest civil government, measured in budgetary terms, in history. Federal spending alone in fiscal year 2006 is expected to be over $2.7 trillion, which means the federal government spends $7.4 billion a day or $5.1 million in every minute of the year. This is 815 times the level of federal spending in 1930.

Things have been getting worse recently. In the first five years of the Bush regime, federal spending increased 45%. Readers of Mises.org may remember that they were warned about Bush's fiscal irresponsibility before he took office. For comparison's sake, during the eight Clinton years nominal federal spending increased 32%, and under Bush I federal spending increased 23% in four years. In the 2000 election, Bush II promised to shovel money into all sorts of programs — and he's kept that promise.

Since 1930, in addition to the spending increases, the feds also drove prices up more than 1,100%, according to the Consumer Price Index. Also, we should suspect that these inflation numbers are low since government officials have an incentive to underestimate inflation.
If we adjust the spending numbers to account for this inflation, real federal spending is 65 times larger than it was in 1930. The US population has more than doubled since 1930 and if we take the population changes into account, real per capita spending is 27 times higher than in 1930.
In estimating real federal spending I'm not dismissing the effects of inflation, nor am I absolving the state of its complicity in driving prices up. These calculations are simply an attempt to give us some idea of the growth in government and the attendant loss of our liberties over the last several decades.

This $2.7 trillion in federal spending breaks down to $9,000 per capita or more than $36,000 for the average family of four. If we add in all state and local spending, then total government depredations (a term Murray Rothbard used to describe the greater of government spending and government receipts) are currently over $4.4 trillion or about $14,700 per person annually. Since 1959, government depredations, in real terms, have increased at an average annual rate of 4%. That kind of spending will buy a lot of votes.

A significant portion of this spending is being financed with government borrowing. In 1930, the per capita debt load was $140 per person. The current federal total debt level is $8.4 trillion, which works out to around $28,000 per person. In short, the per capita debt load is 200 times larger than it was in 1930. Adjusting for inflation, the real debt per capita is still over 16 times more than it was in 1930.

Federal government debt increased $553 billion in fiscal year 2005 alone. That's more than $1.5 billion of additional debt per day and over $1 million of borrowing per minute for every minute of the year. The interest on the debt in 2005 was $352 billion or more than $1,100 for every man, woman, and child in the country. These interest payments are roughly equal to 37% of federal income tax revenues.

Much of this debt is owed to the Federal Reserve. US taxpayers are on the hook for $758 billion of government securities that are held by the Fed. So on average, every person in the country owes the Fed about $2500.

Tax revenues and borrowing have financed all sorts of interventions. Since 1959, we have suffered from the Great Society, the war on poverty, price controls, increasingly burdensome environmental regulations, the establishment of the Department of Education and its increasing federal control over local schools, Federal Reserve created recessions, agricultural price supports, minimum wage laws, and energy policies that keep oil and gasoline prices high.

There's more. …

Read the rest of this article at Mises.org

Liberty Letters comment: The Republicans are the more conservative party?

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