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Federal Government Spending Report
- summary page -
by Michael Hodges
(updated May 2011)
- a chapter of the Grandfather Economic Reports -

(The Grandfather Economic Report is a series of reports examining economic conditions facing families and youth, compared to prior generations. This is the summary page of the chapter on Federal Government Spending. State & Local Government Spending is covered in a separate chapter)


FY 2010 Federal Govt. Spending of $3.8 Trillion Consumed >
32% of the Economy, or $12,239 per man, woman and child,
or 46% of the economy counting regulatory compliance

The Social Spending portion consumed 62% of total spending,
and has increased 17 Times Faster Than The Economy

and - federal employee compensation is 2.3 times higher
than paid in the private sector

federal ratios-1929 vs CurrentHere are a few sample color graphics
from the Full Federal Government Spending Report

Today's economy is 10 TIMES more federal government-spending-dependent, compared to prior generations.

The left chart shows total federal spending as a share of the economy - growing from 3% of the economic pie prior to the New Deal, to 31% of today's economy.

Had total federal spending been reduced following World War II, equivalent to reductions of the defense spending ratio, the current federal spending ratio would be about 13% of the economy - - instead of today's 32% ratio - - resulting in 50% less spending and taxes.

Political leaders chose, instead, to eat up all defense reductions PLUS much more via massive social spending - - much financed by debt.

Who was it that said we are a nation of small government with a predominant free-private sector? Well, we used to be - - but, no longer. Does this impact the future economics and freedom of our younger generation. You bet.

Summarizing: the federal share of the economic pie increased 800%.

federal component trendsA POWERFUL, REVEALING PICTURE - FEW HAVE SEEN

Question: What has caused the explosive growth of federal spending faster than the economy?

Answer: look for the line in this chart that has risen the most over that period.

The BIG CULPRIT (rising red line) is SOCIAL SPENDING, which grew 17 times faster than the economy - - to a new high - - more than eating up the long-term decline of defense spending ratios shown by the black line in the chart. The full report (link below) shows once the social spending ratio rose above 5% of national income in the late 1960s, citizen trust in government plummeted to half prior levels - - and inflation-adjusted median family incomes stagnated for all families and fell for single wage-earner families. Note social spending (red line) stopped rising in the early 1980s as if it hit a brick wall, and then fell - - and other data show trust in government surged, only to fall back later as social spending ratios again climbed. This is a powerful finding that deserves more attention. (the full report contains a link to a special report and chart on citizen trust polling data).

This trend (red line) is unique in U.S. history.

National security was the prime reason our founding forefathers formed a federal government. The declining black trend line is defense spending, which in 2001 had dropped to 3.7% of the economy's national income, below where it started - following a 5-decade downward slope. The black defense line for 2003-10 increased to 6% of national income as shown in the graphic. This multi-decade declining defense ratio camouflaged a new direction for government - - surging social programs and spending.

This trend calls into question our nation's focus and readiness to detect and deter major national security challenges - - compared to the priority focus outlined by our nation's founding fathers.

WHERE DOES THE MONEY GO ??

Following is a pie chart showing the major spending components of a Federal Budget - and its huge red cloud

Federal Budget Pie - where it goesThe Government Spending Report and the Government Growth Report show the federal government increased its spending at a rate much faster than growth of the economy (nearly twice as fast) since the end of World War II). Where does the spending go?

Last fiscal year the federal government spent $3.8 Trillion - - or about $12,239 for each man, woman and child in America, up 94% in past 10 years.

The left chart displays this $3.8 Trillion as a pie, with each major spending component shown as a percent of the total.

The BIGGIE is that HUGE RED CLOUD in the chart called SOCIAL PROGRAM Spending, which consumes 62% of the budget. (To place this in perspective, in 1948 social spending was but 10% of the federal budget - - prior to the New Deal it was near zero).

This graphic is reviewed in more detail in the full Federal Spending Report - - next link.

Additionally, also shown in the following link, the average federal government employee earns over twice as much as the average private sector worker - - in addition to significantly more job security.

You have just reviewed a summary report on Federal government spending.

Suggest you read the full Federal Government Spending Report
with easy to understand eye-opening pictures


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Copyright 1997-2011 Michael W. Hodges. The Grandfather Economic Report series is the intellectual property of its author; all rights reserved under Copyright Conventions. Permission to redistribute all or part of this series for non commercial purposes is granted by the author, provided the associated web page address (URL) is included and full credit given to the Grandfather Economic Report and the author, Michael Hodges. Notice appreciated via email.