Government Spending: Recommended Web SiteJonathan Bean • Tuesday June 15, 2010 6:59 AM PDT •
In a recent debate, scholars fiercely debated whether or not Texas was really a “small-government” state when compared to California (or any other state). The BP spill, some argued, showed that places like Texas and Alabama were gimme states with their hands out to the federal government.
No doubt there is some truth to all states being “gimme” states but the argument was really about the relative status of state government spending and “intergovernmental transfer” (federal money to the states).
In days of old, I would hustle over to my university’s Government Documents Repository and tediously construct the numbers from U.S. and state budgets. In addition, there are useful print volumes of Statistical Abstracts, Historical Statistics of the United States, and a new edition focused on state data.
Fortunately, many of these debates-in-a-vacuum no longer require such tedium. Instead, all of this data can be found at
So, back to the question: is Texas a “small-government” state versus California?
The data show that local and state government spend 18% of Texas GDP. Add the 25% GDP that the feds spend and the total is 43%
California spends a whopping 28% of state GDP plus the same 25% spent by the feds. Total: 53% of GDP.
This site (http://www.usgovernmentspending.com) allows anyone to quickly find data based on per capita, % of GDP, inflation adjusted, etc. Even better, it is historical and gives a sense of change over time. For example, I constructed the following chart based on nominal dollars:
In my mind, 43% or 53% both exceed “limited government.” Bob Higgs would point out the additional factor of busybodiness (and cost) imposed by unfunded mandates, regulations, and living in a world made more uncertain by arbitrary government.
Left-liberals counter that we can outgrow future obligations. If the economy grows, they argue, then we can afford Social Security, Medicare, military spending, and Roads to Nowhere. (Remember Keynes on the stimulus effect of digging holes as “better than [doing] nothing”).
The problem with this left-liberal argument is that it presupposes that the government has a lien on all our present and future labor. However, since we are far more wealthy today, we live longer, eat better, etc. the government ought to shrink. One hundred years ago, Progressives attacked problems of poverty, sanitation, disease that don’t exist today. For a look at how much we have progressed on all social indicators, I recommend the short, delightful book by economist Stanley Lebergott, Pursuing Happiness: American Consumers in the Twentieth Century (Princeton, 1993).
At any rate, if 43% of GDP is “small government,” then we freedom fighters have our work cut out. Even adjusted for inflation, we would have to cut total government spending by up to 50% to get back to where the Reagan Revolution began (and then fizzled) in 1980!
Enough to make me as pessimistic as Bob Higgs about the fiscal end times!