A Look at Government Spending
JESSE POWELL writes:
There has been so much talk of the federal budget and the deficit due to the threatened government shutdown that I thought your readers might be interested in some historical background on these issues.
In fiscal year 1930, before the Great Depression gathered momentum, the federal government ran a budget surplus of 0.8 percent of GDP (Gross Domestic Product); it took in 4.2 percent of GDP in taxes and spent 3.4 percent of GDP. At the depth of the Great Depression, in fiscal year 1934, the government ran a deficit of 5.9 percent of GDP (4.8 percent of GDP in taxes and 10.7 percent of GDP in spending). The government ran huge budget deficits during World War II, peaking at 30.3 percent of GDP in 1943, but by 1947 the government’s budget was in surplus and the debt from World War II started to shrink in relation to the size of the economy. (more…)


