The Ever-Expanding Government Meme Lives On

I happened to catch Americans for Prosperity‘s Tim Phillips talking about the ever growing government [1], in the context of the recent budget deal. Here’s what the actual data indicate:

everexpand.jpg
Figure 1: Log ratio of real Federal government consumption and investment plus transfers to real GDP (blue), and ratio to potential real GDP (red). NBER defined recession dates shaded gray. Real transfers calculated by dividing line 22, BEA NIPA Table 3.2 by PCE deflator. Potential GDP is measured in Ch.05$, and adjusted to Ch.09$ compatible with the latest GDP release by taking the ratio of 2011 GDP reported in the June 2013 and November 2013 releases. Source: BEA, CBO (Budget and Economic Outlook, February 2013), NBER, and author’s calculations.As a share of GDP, the current level is below that recorded in 1982Q4 (under President Reagan); as a share of potential GDP (guesstimated), the current level is below that recorded in 1986Q3 (under President Reagan).

This piece is cross-posted from Econbrowser with permission.

One Response to "The Ever-Expanding Government Meme Lives On"

  1. EmsScs   December 13, 2013 at 11:23 am

    That is direct expendiiure and receipts.
    Regulation is a cost to those who are regulated even though that cost shows up on the employers P&L and not the government's cash flow statement.
    Whether the regulation is worth it or not is not the issue.
    I hope no one would argue that we have not seen a massive increase in Federal govt regulation in the last 6 years –if you do, you can look it up for yourself.
    That cost is the same as a tax to the one who has to pay it.
    And as with any cost it gets passed on to consumers or comes out of the shareholders and creditors pockets–one way or the other.

    And i don't even have a model to follow that logic.

    I repeat what would be obvious top most: You can not be an employee without and employer, and we have not been creating new employesr anywhere fast enough IMO.