Growth Rates in Government Spending by President

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A president takes office in January after an election. The budget that year is not under his control. His budget impact (in conjunction with Congress) starts a year later. I measure growth from that date until one year after a president leaves office. I use data provided by the St. Louis Fed (FGEXPND = current dollars, not inflation-adjusted). The spending must all be financed by taxes and borrowing. Spending is therefore itself a measure of these financing burdens upon taxpayers.

Truman (1948–1952 term) 43.3 to 65.8; 52 percent growth in 4 years

Eisenhower (1952–1960) 65.8 to 89.8; 36.5 percent in 8 years

Kennedy-Johnson (1960–1968) 89.8 to 176.7; 96.8 percent in 8 years

Nixon-Ford (1968–1976) 176.7 to 394.7; 123.4 percent in 8 years

Carter (1976–1980) 394.7 to 649.7; 64.6 percent in 4 years

Reagan (1980–1988) 649.7 to 1143.8; 76.1 percent in 8 years

Bush I (1988–1992) 1143.8 to 1484.3; 29.8 percent in 4 years

Clinton (1992–2000) 1484.3 to 1942.5; 30.9 percent in 8 years

Bush II (2000–2008) 1942.5 to 3219.8; 65.8 percent in 8 years

Obama (2008–2012) 3219.8 to 3705.2; 15.1 percent in 3 years

Obama’s budget projections call for an increase of 19.4 percent between 2012 and 2017. If realized, he’d have 34.5 percent in 8 years.

Truman had a Democratic House after his election. Eisenhower had a Republican House the first 2 years and a Democratic House the last 6 years. The House was Democratic from 1954 to 1994, Republican from 1994 to 2006, Democratic from 2006 to 2010, and Republican since 2010.

Federal government expenditures in inflation-adjusted terms grew from 281.3 to 3212.5 or by 1,042 percent between 1948 and 2012. That’s a real rate (after adjusting for price inflation) of 3.7 percent a year continuously compounded. Real GDP growth has been 3.0 percent a year.

I see four main things in these data. First, overall the federal government grew faster than real income. In absolute terms, it shows high growth all the time. Second, there was a relatively higher growth in federal spending between 1948 and 1988 than after 1988. In the higher growth era of 1948 to 1988, Eisenhower was the lower-growth exception. Otherwise in this era both Democrats and Republicans presided over relatively faster-growing federal budgets. These are associated with wars, but not solely.

In the relatively lower-growth era from 1988 until the present, Bush II is the higher-growth exception, and he made several wars. So, third, the person who is president makes a difference at times, no matter what the party affiliation, and this depends to some extent on whether he goes to war.

Fourth, the relatively higher growth era mostly overlaps Democratic control of the House, and to some extent the lower growth era overlaps more Republican control of the House.

These notions are rough and far from being fine-tuned. But war is a key factor. The president that goes to war creates more spending (and inflation) and grows the government at a higher rate.

4:08 am on July 18, 2012
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