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>The fact is the federal government seems to grow and spend without any limit or regard to logic. That's not the case really. In the last 50 years there was no

>The fact is the federal government seems to grow and spend without any limit or regard to logic. That's not the case really. In the last 50 years there was no trend in federal spending vs GDP, with widest movements being a growth from ~19% in FY2001 (which ended with 09/11) to almost 25% in 2009, with subsequent decline to the same average as before. Nothing catastrophic. In the immediate postwar era of course, the spending has been much lower at around 15% but that was when the population was 9 years younger and no Medicare or Medicaid existed, i.e. old or poor sick people were just left to fend for themselves. In 2024 out of 6.8T in federal spending, Medicare and Medicaid was 1.9T. Remove that and you are back to a typical 1950s level of 16-17% federal spending to GDP.

silisili 2y ago
Two points. First, that's not true. Ignoring COVID, it keeps going up, slowly but surely. https://fred.stlouisfed.org/series/FYONGDA188S https://fred.stlouisfed.org/series/FYONGDA188S Secondly, why does the government need to spend to match GDP? The more productive we are, the more the government spends?
- anovikov 2y ago
  In theory, it should grow faster than GDP. Because government spending is inefficient but it is able to do things that the free market can't, so poor/less developed country should try to minimise it to enable fast, efficient growth, while a rich country should try to achieve the best results for everyone and that is done through government spending (fast growth is impossible anyway because it's done by adopting someone else' technology and when you are already the richest it's not possible as yours is the best one - fast growth is a catch-up growth). In addition, it becomes inevitable because with high per capita GDP there is a lot of excess income which people want to invest because their needs are covered, and varying outcomes of those investments (even if purely random, by chance), tend to compound, which results in entrenched, systemic inequality, that might even crystallise into caste system. Only way to counteract it is more taxes and more government spending, so that there's less excess income left to invest, and outcomes of those less lucky are compensated by gov spending.
  - silisili 2y ago
    There's a meme that goes as such: Step 1: It's not really happening Step 2: Yeah, it's happening, but it's not a big deal Step 3: It's a good thing, actually I feel like this thread has fast tracked the steps. I don't mean this to be insulting. I think you actually bring up interesting points. But perhaps could have not led off with step 1 and started with this.
    - anovikov 2y ago
      Well that was more or less my initial point. Yes from 1950, spending has increased but it did so by introducing beneficial things like Medicare or Medicaid, and vastly more people under Social Security because of demographic transition. So it wasn't a bad thing. And after 1975, spending didn't increase much or at all. While it could and probably should have, to bring in more equality and improve quality of life for everyone.
      - s1artibartfast 2y ago
        But why should taxes scale GDP per capita? Growth means more production, controlled for inflation. Are citizens getting several times more services and goods from the government. It certainly doesn't seem like it. We dont have 10x more teachers per student, 10x more police, or 10x more public roads per capita.
        cycomanic 2y ago
        Because if GDP per capita increases cost for services as well as number of required services increases. Take a car analogy, if the GDP per capita increases such that the number of people who can afford a car doubles, the government will have to invest more in roads. Moreover the expectations to the quality of the roads will likely increase as well. In other words if more stuff gets done in a country your more likely to night more infrastructure and services to support it.
        s1artibartfast 2y ago
- s1artibartfast 2y ago
  >Secondly, why does the government need to spend to match GDP? The more productive we are, the more the government spends? I have been harping on this for years Tax as a percent of the economy has gone through the roof, both as a percent of GDP, and as inflation adjusted dollars. If you compare to a benchmark like the 1940s, tax% of GDP has more than doubled, and GDP has increased ~4.5x. This means someone today pays about 10X the taxes (controlling for for inflation!). State and local taxes have grown even faster than federal taxes. Is the government providing 10X more services per capita? Do we have 10X the schooling? 10X the police? 10X the roads? These numbers are already scaled for both inflation and population, so it should actually productivity.

silisili 2y ago

Two points. First, that's not true. Ignoring COVID, it keeps going up, slowly but surely. https://fred.stlouisfed.org/series/FYONGDA188S https://fred.stlouisfed.org/series/FYONGDA188S Secondly, why does the government need to spend to match GDP? The more productive we are, the more the government spends?

anovikov 2y ago
In theory, it should grow faster than GDP. Because government spending is inefficient but it is able to do things that the free market can't, so poor/less developed country should try to minimise it to enable fast, efficient growth, while a rich country should try to achieve the best results for everyone and that is done through government spending (fast growth is impossible anyway because it's done by adopting someone else' technology and when you are already the richest it's not possible as yours is the best one - fast growth is a catch-up growth). In addition, it becomes inevitable because with high per capita GDP there is a lot of excess income which people want to invest because their needs are covered, and varying outcomes of those investments (even if purely random, by chance), tend to compound, which results in entrenched, systemic inequality, that might even crystallise into caste system. Only way to counteract it is more taxes and more government spending, so that there's less excess income left to invest, and outcomes of those less lucky are compensated by gov spending.
- silisili 2y ago
  There's a meme that goes as such: Step 1: It's not really happening Step 2: Yeah, it's happening, but it's not a big deal Step 3: It's a good thing, actually I feel like this thread has fast tracked the steps. I don't mean this to be insulting. I think you actually bring up interesting points. But perhaps could have not led off with step 1 and started with this.
  - anovikov 2y ago
    Well that was more or less my initial point. Yes from 1950, spending has increased but it did so by introducing beneficial things like Medicare or Medicaid, and vastly more people under Social Security because of demographic transition. So it wasn't a bad thing. And after 1975, spending didn't increase much or at all. While it could and probably should have, to bring in more equality and improve quality of life for everyone.
    - s1artibartfast 2y ago
      But why should taxes scale GDP per capita? Growth means more production, controlled for inflation. Are citizens getting several times more services and goods from the government. It certainly doesn't seem like it. We dont have 10x more teachers per student, 10x more police, or 10x more public roads per capita.
      - cycomanic 2y ago
        Because if GDP per capita increases cost for services as well as number of required services increases. Take a car analogy, if the GDP per capita increases such that the number of people who can afford a car doubles, the government will have to invest more in roads. Moreover the expectations to the quality of the roads will likely increase as well. In other words if more stuff gets done in a country your more likely to night more infrastructure and services to support it.
        s1artibartfast 2y ago
s1artibartfast 2y ago
>Secondly, why does the government need to spend to match GDP? The more productive we are, the more the government spends? I have been harping on this for years Tax as a percent of the economy has gone through the roof, both as a percent of GDP, and as inflation adjusted dollars. If you compare to a benchmark like the 1940s, tax% of GDP has more than doubled, and GDP has increased ~4.5x. This means someone today pays about 10X the taxes (controlling for for inflation!). State and local taxes have grown even faster than federal taxes. Is the government providing 10X more services per capita? Do we have 10X the schooling? 10X the police? 10X the roads? These numbers are already scaled for both inflation and population, so it should actually productivity.