Tuesday, May 19, 2009

Government Actually Can Shrink?!

The idea of smaller government is usually just textbook material. But Canada has actually done it -- look at the chart below from Cato (I first saw this at http://mjperry.blogspot.com/):

Cato also notes that most of Canada's government spending is not federal so there is a degree of competition (via migration) to ensure that the government spending is actually beneficial.

This picture also shows how the "big spending Democrat" stereotype is incorrect -- government spending / GDP fell under Clinton and increased under Bush.


Gabriel M said...

What about various trusts? SS and all that? That stuff doesn't go into G but they are real resources controlled by government. Transfers too.

Milton Recht said...

It would be interesting to see the chart with military/defense spending removed from total and displayed as a separate item. Total defense spending is the biggest item in the US budget.

Clinton significantly shrunk military/defense spending to a level that many outside analysts thought was too low, that were not sustainable and that would eventually have to be increased.

Bush increased defense spending by more than he probably would have but for the excessive low levels when he entered office and because of a reaction (over reaction?) to 9/11.

Obama has done as Clinton and proposed significant cuts to defense that are probably non-sustainable beyond his term(s) of office, if that long.

Congress and the President use defense cuts to hide the deficit costs of new programs. Eventually, the US will need to reestablish its higher defense costs.

Normalizing defense spending through a long-term averaging process would smooth out the cyclicality of US government defense spending as percent of GDP. It would show a truer picture of deficit increases in new government benefit entitlement programs. Cost of government benefit programs are difficult to rein in and smoothing defense spending would show a truer picture of the deficit effect of new benefit programs at the time of enactment.

HispanicPundit said...

It shrunk under Clinton because Republicans refused to pass his healthcare proposals (Hillarycare), and it increased under Bush because Republicans controlled everything.

In other words, its the best situation we can expect with the Democrats and the worst situation we can expect of the Republicans - and at that point, they are similar.

Any other combination will result in significant differences in spending - just look at the Obama Administration now.