And Now For The Truth About The Size Of Our Government...

Capitol Building

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One of the most divisive issues in this country right now is the size of the government.And understandably so.

We have a huge budget deficit and $15 trillion of debt to contend with, so the size of the government–and government spending–is obviously important.

Unfortunately, this topic has now been “politicized,” which means that you can’t talk about it without being cheered or jeered by fans of each respective political team.

And that, unfortunately, leads to a lot of facts being ignored or distorted.

But both political teams are responsible for the debt-and-deficit mess we’re in–and so, I am sorry to say, are the rest of us.

And fixing that mess is going to take decades, regardless of who’s in power.

So, let’s put aside politics for a few minutes and look at some facts…

Everyone hates the government these days. All those lazy, faceless bureaucrats. Taking our money. Wasting it. Racking up huge debts we can't afford to pay.

The common wisdom is that the government has gotten absolutely massive. That there are just bazillions of those horrible lazy bureaucrats now living off our hard work (and getting humongous pensions).

And, yes, there are a lot of government employees.

But don't forget that our population keeps growing. As a per cent of total employed people in our economy, the number of government workers is actually far lower than it used to be. About 16% of us now work for the government.

And there are about the same number of state and local employees as a per cent of total US employees as there have been for the last 40 years.

And state and local governments have actually been balancing their books. (Red = spending, Blue = tax revenue). So that's not where the problem is.

So, then, is it the hated FEDERAL government that has hired all those lazy bureaucrats?

And as a per cent of total employed Americans, Federal government workers have actually been dropping steadily and are now near an all-time low!

So, then, what's the problem? Why has the federal government developed such a huge budget deficit in recent years? (Red = spending, blue = tax revenue)

Well, federal spending has increased radically as a per cent of the economy, and...

Federal tax revenue has dropped sharply as a per cent of the economy.

No mystery, then, why we've developed such a budget deficit in recent years.

The good news is... the solution is obvious. We have to raise taxes as a per cent of GDP (blue) and/or cut spending as a per cent of GDP (red). And given that there are 320 million of us who have to agree, we should probably compromise: A little of both.

But, before we go jacking up taxes and cutting spending willy-nilly, we need to understand that there are two kinds of government spending...

The first kind is what we normally think of as government spending: defence, highways, bridges, NASA, government employee salaries, etc.

Which kind of government spending do you think is bigger?

Right--social programs (blue). By a lot. Importantly, though, this has only happened in the past 20 years.

Over the past 50 years, social-program spending has exploded as a percentage of the economy.

Social program spending (red) has grown so much, in fact, that it now consumes almost all federal tax revenue (blue).

Meanwhile, the OTHER kind of government spending--highways, military, federal salaries, etc.--has actually been shrinking as a per cent of the economy.

Even Military spending--the other big federal expenditure behind Social Security and Medicare/Medicaid--has been shrinking as a per cent of the economy.

The real government budget busters are Social Security, Medicare, and Medicaid.

So, do we have to get Healthcare and Social Security spending under control? You'd better believe we do. If we don't, we're toast.

But! Before you go vote for candidates who are just going to whack Social Security and Medicare/Medicaid spending, remember this...

So we need to fix our social programs gradually, calmly--not in a fit of panic that will throw us into a Depression.

It took us 30 years to get into this mess. (Debt = red, GDP = blue). It will probably take us 30 years to get out.

So now you know the truth about our government. But there are other things you should read about, too...

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