The Size of the Federal Budget During The Past Half Century

Last week, the National Bureau of Economic Research announced that the United States has been in a recession for a year. This made “official” what most already knew, that our economy has been deteriorating rapidly. Recent job losses in the country have been the highest in a generation. The Stock Market is down almost 40% from its October 2007 high.

In a recent post, I analyzed the historical pattern of the National Debt and found that the vast majority of it has been accumulated during the administrations of the last three Republican Presidents, and that during the last 30 years, the National Debt as a proportion of the Gross Domestic Product (GDP) has increased during Republican administrations and declined during those of Democrats.

Today, I wanted to examine what has happened to the size of Federal expenditures during the terms of the last eight Presidents. The metric I used was Total Outlays and a percentage of the GDP. Each Presidential administration was represented by this value during the last fiscal year contained wholly within the tenure of each.

I began with the administration of President Truman and went through fiscal year 2007. The table above gives these values, along with the change from the previous administration.

The pattern with respect to Political Party is not consistent. The size of the total federal expenditures as a percentage of GDP declined during the presidencies of Eisenhower, Reagan and Clinton, and increased during those of Johnson, Nixon, Carter, Bush 41, and Bush 43. For Republicans, it increased in three administrations and decreased in two. For Democratic Presidencies, it increased during two and declined in one. The greatest declines were seen during the terms of Eisenhower and Clinton.

Overall, there has not been an increase in the size of federal expenditures as a percentage of GDP during the last half century. In fact, this measure was slightly lower at the end of the Clinton Presidency than they were nearly 50 years earlier as Truman’s term came to an end.

Has “the government” been getting larger over the last half century? As measured by total outlays as a percentage of GDP, the answer is no. Is there a tendency for Presidents of one Party or the other to oversee more reduction in such expenditures? Again, the answer is no.