Saturday, August 06, 2011

Federal Government Spending, 2008-2011

In light of S&P's downgrade of the US, it is interesting to take a look at Federal Government spending in the last three years 2008-2010 and this current year, 2011. Strictly speaking, the 2010 budget was the first one submitted by Obama; it was released in February 2009 after he took office. However, the American Recovery and Reinvestment Act was also passed in February 2009 and provided for economic stimulus spending of $800 billion over the next several years. It definitely impacted spending in 2009. Note also that while Obama has submitted a budget for every year of his presidency, Congress failed to pass a budget resolution for 2011 and will not do so for 2012 either.

Data are from GPO Access, see here.

Total outlays are as follows. Figures are in billions, so 2008 is $2.983 trillion.

2008 $2,983 billion
2009 $3,518
2010 $3,456
2011 (est.) $3,819

From 2008-2009, spending increased by 18%. Spending in 2011 will be, based on the estimate above, 28% above the level just three years earlier in 2008. The compound annual growth rate 2008-2011 is 8.5%. Over this same period, the general price level as measured by the CPI increased around 2% per year.

The broad based nature of the spending increase is striking. See the table I created showing expenditures by function. Figures here are in millions, not billions. The defense function in 2011 will account for $768 billion, or 20% of total Federal spending.

The figures for Energy are strange; in 2008 there was actually a $416 million surplus in a sub-energy account, Energy Supply, but by 2011 that account is negative $13.732 billion. But this is not the whole story in the energy area: energy conservation also goes from $409 million to $13.161 billion (I guess that was my metal roof that I got a tax credit for?)

I suppose that some of these increases are related to stimulus spending, but my fear and expectation is that any stimulus spending will end up being a permanent increase. In fact, projections for total spending in 2012 and 2103 from the same source above are $3,729 and $3,771 billion, hardly a significant decrease.

Is Federal government spending out of control? Indeed it has been. Is it any surprise that the voters sent Tea Party representatives to Congress to try and get some restraint? And are we surprised that our credit score took a hit?

The same source gives total tax revenues as well. In 2008, Federal receipts were $2,524 billion and in 2011 are estimated to be $2,174 billion, for a 14% reduction.


Anonymous said...

According to the GAO, total spending in constant dollars increased by about 686B from 2008 to 2011. By far the largest part of this (68% or 486B) is mandatory spending. Much of this is for costs associated with high unemployment and care for veterans. Defense spending increased by 17% (118B) and non-defense discretionary spending increased by 14.6% (100B).
Why didn’t these numbers come down after 2009? You make a big case out of this in your earlier post though to be fair; you do wonder how much is related to the stimulus bill. It probably would have been a good idea to check before you posted your blog, but I am sure you are busy with your administrative duties. For your information, the answer is the stimulus accounts for almost all of the increase.
Non-Defense Discretionary spending in real dollars:
year spending stimulus spending w/o stimulus
2008 469 0 469
2009 513 53 460
2010 582 112 470
2011 569 63 506

As a point of comparison, Obama is much thriftier in spending non-defense dollars than GW Bush (3.5%/year), better than his father GHWB (2.9%/year), similar to Clinton (1.8%/year) and not as thrifty as the master himself, Ronald Reagan (-1.8%/year).
If you wanted to summarize spending under Obama quickly, you would say: 1) costs grew because of high unemployment, 2) continued growth of military spending, and 3) economic stimulus spending.
See your more recent post for my full comment.

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