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It’s the Spending, Stupid: A Crucial Historical Look at Federal Spending

We have failed to heed the lessons of economic history, with terrible consequences for our economy and country. And the most crucial of those lessons, particularly since the start of LBJ’s Great Society, is this: deficits have been caused not by a lack of income-tax increases but by recession and, most of all, by excessive government spending.

The failure to learn that lesson is again on painful display, as President Obama travels the country pointing the finger at “the rich” for not forking over enough income. By this narrative, the 36 percent income-tax rate paid by the wealthiest Americans is somehow robbing the poorest Americans, whose income-tax rate is zero percent; something one would never know from Democrats’ class rhetoric.

Because I comment on this topic so frequently, especially in the context of Reaganomics, I constantly deal with these issues from a historical perspective. Here, I would like to make it easy for everyone to see the numbers themselves and understand the root of the problem.

The answers are as easy as googling the words “historical tables deficit.” Two sources pop up: CBO historical tables and OMB historical tables. “CBO” is Congressional Budget Office; “OMB” is Office of Management and Budget. These are the official go-to sources for data on deficits, revenues, and government expenditures.

Either source will work. To keep it simple, I’ll focus on the OMB numbers. At the OMB link is Table 1.1, titled, “Summary of Receipts, Outlays, and Surpluses or Deficits: 1789-2016.” That is an official scorecard of spending by the federal government since the founding of the republic.

Looking closely at the chart is an eye-opening experience. As the first two columns show, receipts (i.e., revenues) and outlays (i.e., expenditures) moved up and down throughout our history. In 1965, however, something historically unusual, something literally deviant, began: Spending increased every single year, non-stop, consistently, without exception, into the Obama presidency, from 1965-2009.

There are few constants in the universe: gravity, the sunrise, the oceans, the moon. Add another: spending by the federal government; it rises every year.

Significantly, revenues don’t increase every year. The most dependable reason for declines in revenues is not a lack of tax increases, or high enough income-tax rates, but recessions. Since 1965, as the data shows, annual revenues declined seven separate times.

At the start of the Great Society, in 1965, revenues and expenditures were nearly equal, with expenditures only slightly higher, leaving a manageable deficit of $1.4 billion. By 2009, however, annual expenditures ($3.5 trillion) had far outpaced annual revenues ($2.1 trillion), leaving a record deficit of $1.4 trillion.

Significantly, the biggest one-year drop in revenues was from 2008-9, when they declined from $2.5 trillion to $2.1 trillion. Worse, President Obama and the Democratic Congress responded with an $800-billion “stimulus” package that didn’t stimulate. In other words, they responded in the worst way: with another $800 billion in government spending. That further mushroomed the record deficits/debt we face. The math is very simple.

Government spending, which has hampered growth rather than spark growth, caused this fiscal crisis.

It is crucial to realize that this spending addiction is a new thing in American history. Previous generations of politicians showed much more restraint. Prior to 1965, expenditures were not following an ever-upward trajectory; expenditures decreased year-to-year frequently, nearly two-dozen times between 1901 and 1965, even during the administrations of big-government liberal presidents, like Woodrow Wilson and Franklin Roosevelt. 

This changed in the mid-1960s, when the federal government began a serious spending problem.

How do we communicate the crisis to the wider public, beyond charts and data?

I suggest comparing the situation to a household: Your family’s annual revenue has probably not enjoyed a 40-year-plus consecutive increase. For some years, you were paid less. Perhaps you lost a job, took a pay cut, or switched jobs. Maybe your spouse was laid off, or left work to have a child. You bought a house one year, another 20 years later, spent a ton of money on your children’s college education, lost on a bad investment.

 I doubt your family’s yearly revenue has been on a steady upward climb since 1965. Life obviously doesn’t work that way.

 And yet, imagine if each successive year, without fail, you spent considerably more money than the previous, including money that isn’t yours. You added debt each year, creating massive debts for your family and children. You paid taxes with a credit card.

How long would this go on before you ended up with a credit downgrade or in jail? Get the picture?

If President Obama and the Democrats don’t, they should. Warren Buffet certainly should. Our fiscal crisis is due not to insufficient income taxes but uncontrolled, undisciplined spending.

To paraphrase Bill Clinton’s 1992 campaign slogan, “It’s the spending, stupid.”

(© 2011 Paul Kengor)


Paul Kengor is professor of political science and executive director of the Center for Vision & Values at Grove City College. He is also co-author (with Patricia Clark Doerner) of The Judge: William P. Clark, Ronald Reagan's Top Hand (Ignatius Press, 2007).
  • noelfitz

    This is a difficult article to follow, so will you allow a simple-minded Irish man to comment. The Great Society aimed at eliminating poverty and racial injustice. Were these really harmful objectives? How many in the US really want to get rid of Medicare and Medicaid? Would getting out of useless wars save money?

    Is it really fair to expect the super-wealthy to avoid paying taxes at the rate poorer folk pay?

    I see “Warren Buffett, the third-richest man in the world, has criticized the US tax system for allowing him to pay a lower rate than his secretary and his cleaner” http://www.timesonline.co.uk/tol/money/tax/article1996735.ece

    I believe in the Micawber theory: “Annual income twenty pounds, annual expenditure nineteen nineteen six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.”

    Thus to get the balance between income and expenditure is vital. This can be achieved by reducing expenditure or raising taxes. Both should be considered.

    Incidentally when Bill Clinton was President in 2000 was there a budget surplus of $230000000000. How much of the present financial problems in the US are due to wasteful war expenditure during the Bush years?

    • To answer your last question, not nearly as much as during the Obama Administration.

      • fishman

        The article points out that blame is very much due to BOTH parties. Spending has gone up EVERY YEAR since 1965 ( at least 12 year of which republicans has significant control of the presidency and congress). There is no president or congress democratic or otherwise who has taken proper responsibly since 1965.

    • fishman

      Also, there is another article that point out that the wealthy 50% of Americans pay 90% of all federal taxes. Which seems fairly reasonable , but you cannot raise taxes forever , so one question that has not been answered is what percentage of Total income is current being collected by the government. Currently the federal income tax is about $2 b dollars per year and from what I can glean the possible income is about $20 b if everyone was taxed at 100%. So it looks like about 10% of all possible taxes are being collected. How much more can be collected without really hurting the economy? I suppose no one can even guess that number.

  • Mary Kochan

    That’s why I am so proud to live in America — the only country on earth with no poverty.

  • noelfitz

    Mary,

    I do not know if your post had my comments in mind.

    I read what the American bishops think (http://old.usccb.org/cchd/povertyusa/povfacts.shtml).
    **************************************************

    Poverty USA: The State of Poverty in America

    The official poverty rate in 2009 was 14.3 percent — up from 13.2 percent in 2008. This was the second statistically significant annual increase in the poverty rate since 2004.

    In 2009, 43.6 million people were in poverty, up from 39.8 million in 2008 — the third consecutive annual increase in the number of people in poverty.

    Between 2000-2008, the number of poor Americans grew by more than nine million.

    The number of people living in extreme poverty, that is, those with incomes below half the poverty line, rose to over 17 million people. That is the highest level on record since data first became available in 1975.

    Source: U.S. Census Bureau, Housing and Household Economic Statistics Division: 2008.
    **********************************************

    I mildly disagree with you sometimes on politics and economics, but on religious issues I have never disagreed with you.

  • Mary Kochan

    You are the one who said the Great Society programs were to eliminate poverty. That is the justification for raising taxes, right? Because the taxes support great government progams that eliminate poverty. So how is it then that we still have poverty? Oh, I know, we have to keep increasing the taxes until everyone is equally poor, then we just won’t notice the poverty. Gotcha.

    • Mary,

      We declared war on poverty. Poverty won. I suggest we declare war on prosperity, then we may solve the poverty problem by reducing it to the absurd.

  • goral

    Gov’t handling social ills is equal to a four yr. old cleaning a mirror. It is the most inefficient way to take on social problems. Every agency that is set up to deal with these issues should be called
    The Colossal Waste Agency. Anyone who needs further explanation of why this is so voted for Obama.

    There are just people out there who are fiscal four yr. olds and must be kept out of governance no matter how “nice” they are.

    • Goral: I read your comment to a four year old and the answer was “da da goo doo dah ga” which translated loosely means: “Don’t compare me with those idiots please, I am poty trained and they are not.”

      I only wanted to convey the message.

  • Mary Kochan

    Interesting observation from Mortimer Zuckerman on why this tax the rich stuff just won’t work: Even for those who support higher taxes on the wealthy, as I do, we must remember that we have an income tax system in which fully half the “taxpayers” pay no tax at all, and in which the variety of loopholes cries out for a real reform of the tax code. Even if the government instituted a 100% tax on both corporate profits and personal incomes above $250,000 per year, it would yield enough revenue to run the government for only six months. Why? Because under Mr. Obama’s presidency, government spending has swelled to 24% of GDP from 18%. From here.

  • noelfitz

    This article is a serious and thoughtful one, for which I am grateful, and in the same spirit I attempted to reply.

    I appreciate the respectful and thoughtful comments contributed, as I am out of the US for over 40 years and my views may not reflect the current position.

    Mary,
    I always respect your deep, sincere views, so many thanks for your reply. Your points are well made and insightful.

    Carlos,
    Thank you also. Your reply is robust, but I am not sure what you mean by “I suggest we declare war on prosperity, then we may solve the poverty problem by reducing it to the absurd”.

    Goral,
    You wrote “Gov’t handling social ills is equal to a four yr. old cleaning a mirror.” Would you like to explain this?

    Carlos 2
    You wrote “I read your comment to a four year old and the answer was “da da goo doo dah ga” which translated loosely means: “Don’t compare me with those idiots please, I am poty trained and they are not.” I see you are “poty” (sic.) trained, who are those that are not?

    As this is a Catholic site let us have a look at what the NT has to say.

    The early Christian community helped the poor, as Paul tells us “Macedonia and Achaia have been pleased to share their resources with the poor among the saints at Jerusalem” (Ro 15:16). Also the Jerusalem Church “asked only one thing, that we remember the poor, which was actually what I was eager to do” (Gal 2:10).

    In the Magnificat we read “he has filled the hungry with good things, and sent the rich away empty” (Lk 1:53), thus we as individuals, families ,and nations should do likewise.

    In Luke we also read:
    “Blessed are you who are poor,
    for yours is the kingdom of God. Blessed are you who are hungry now, for you will be filled” (Lk 621).

    Thus our religion encourages us to help the poor, and as we live as citizens in countries with governments it is the duty of these to contribute to the common good and help those who need help.

  • Mary Kochan

    Wow! Where did you dig those scriptures up from — never heard them before. Man, this really lights a fire under me to help the poor. I know a family right now with 5 kids, the mom is in school for nursing, the dad is in prison, her mom lives with them but is disabled. They could use about $5 thousand to make it until the dad gets home. I want to give that to them, so Noel, I demand that you give me the money so I can give it to them. You can use my email addy, which you have, to send the funds to my pay pal account. I’m so grateful to God for giving me the wisdom to figure out such an expedient manner to express my generosity and for giving me such pure intentions, which as you pointed out is all that matters. Don’t you dare start whining that you don’t have the money, or you need it for youself or for your family, either, because then I will know that you don’t really believe those scriptures and are a fake Christian.

    • Kenneth Jones

      Mary, stick that tongue in your cheek any farther and you’ll hurt yourself.

      My father said that the American Democrat party’s philosophy was “Let us give them your money.” Has a nice ring to it.

  • My Grandfather once told me, referring to the Democrats, “That’s all they want is your money.” I never believed him until recently. He predicted for years that the Democrats would one day wreck the country. Now it’s happening before our very eyes.

  • goral

    I have nothing but time as long as the power stays on. As Irene rages around us I can consider the damage in light of this article. I’ve never seen so much water on what was once dry land. Our altitude is over eleven hundred feet and hilly. On my fourth attempt I found a passable road to get to my rental to make sure the sump pump is working. It’s working but how do you pump water from a sinking ship? The neighboring brook is now flowing into the yard. I may qualify for gov’t emergency relief.

    Before noelfitz calls be a shameless hypocrite, let me explain as requested.
    The well intentioned four yr. old will use up a whole roll of towels and the whole container of widow cleaner and the mirror will now have even more smudges. Content that the task is finished the adolescent will turn her attention to another pressing issue while the somewhat amused and tolerant mom will fix the job with one used paper towel.

    The ongoing problem of stains and strains on peoples lives is not a job for adolescent gov’t who works with someone elses cleaning products. There is no incentive to be judicious and efficient as is the mom who knows her income and expenses.

    We all know people, even in our families, who know how to milk a blind, technically driven help system.
    Emergency relief on the other hand requires an immediate, massive and mesurable response. This is where gov’t shines and performs its legitimate function. Even here there is great opportunity for abuse as we’ve witnessed with Katrina.
    The gov’t, like the downtown Chicago police, has to be there on time, take care of the problem and disappeat – fast.

    Poverty is a lingering issue, always there, always requiering the caring attention of intimate individuals like “moms” and “dads” who know how to be affective with the budget they have.

    To the democrats and many of our bishops who like Peter have a well meaning heart, Jesus would say:
    “Get thee behind me Satan”, because you are not thinking as you aught to think.

  • noelfitz

    Thanks for all the replies to my contributions. They have really caused interest. I would hope that no one is using these as an opportunity to insult or humiliate me. I may be wrong, but I try to express views with honesty and sincerity and to be respectful to those who disagree with me

    Mary, I have previously sent you money using PayPal (Payment To cyberCatholics.com / Bayouland Computer Solutions, LLC), if you like you can give this to the poor family you know.

    You wrote “Don’t you dare start whining that you don’t have the money, or you need it for youself or for your family, either, because then I will know that you don’t really believe those scriptures and are a fake Christian.” Over several years I have contributed to sites you are involved with. I would be surprised and disappointed if you considered me a “fake Christian”.

    As a member of the St Vincent de Paul Society I visit prisoners in the medical unit of a local prison every week. I bring in to them, from time to time, clothes and other small items (such as CDs). I consider it appropriate to do this. It is not a bad thing for an individual, a family, a community or a country, to try to help others – “for I was hungry and you gave me food, I was thirsty and you gave me something to drink, I was a stranger and you welcomed me, I was naked and you gave me clothing, I was sick and you took care of me, I was in prison and you visited me.” (Mt 25:35–36.)

    America has a great tradition of going to people’s help, as have individual Americans. This should not be denigrated.

    Goral, our views and mine might not be very different. You wrote that there is a need for Government help to individuals at certain times. I agree. I do not think anyone would support assisting those who do not need it, but there are times when governments have a role. I sincerely hope that Irene has not done too much damage to you or your family.

  • goral

    I requested assistance from the Fire dept. and they were there. Like the Chicago police they showed up in strength, pumped the basement enough for me to get just my boots wet and promptly left leaving me to work my sump pump. That’s gov’t working as it should. Let’s see what my insurance company does for me tomorrow.

    Irene was mean and way out of line. This tropical storm was not suppose to go this far north. It was damaging but much less than the paranoid, hype driven media put out.
    We all have to absorb some damage during our lifetime which in turn makes us more responsive to the needs of others.

    Thanks, noelfitz for your empathy and good wishes. It’s all in His hands.

    “I the Lord of snow and rain….”
    “Finest bread I will provide….”

  • Mary Kochan

    Noel, thank you for donating to Catholic Lane. I don’t know anything about who donates or in what amount/s unless someone mentions it. It goes to the company that owns the site and helps defray expenses of maintaining the site.

    But back to the point. First of all you say that you don’t get a response unless you are controversial. There are other ways to get responses to your posts — try adding information, asking a question, making some observation — you don’t have to be a contrarian to get a response.

    As to the issue here. We are not in a jovial mood about the destruction of our country that we are witnessing. In the past, yes, I perhaps would laugh off your liberal comments. It is like Rush Limbaugh says: “When liberals are out of power they are funny.” Their statements are so ludicrous, like your defense of the War on Poverty, trillions of dollars spent that did not lift anyone out of poverty — but intead destroyed the black family and is well on its way to destroying the white family — prompting Carlos’ trenchent and ironic comment that what we need is a war on prosperity.

    In actuality a war on prosperity is exactly what we have in fulfillment of the other half of what Limbaugh says: “But when liberals are in power, they are dangerous.”

    And how do they get into power Noel? Because of people like you who will vote for any insanity that promises to help the poor. It doesn’t have to actually help the poor; it merely has to have that intention, or rather that as the stated intention. This is how the baby-killers have amassed votes among the Catholic faithful — by promising to help the poor. This is how the purveyors of porn to children have amassed power, by promising to help the poor.

    It just isn’t funny anymore, Noel. We are really and truly watching our country be destroyed by these people. And guess who suffers the most as our economy is laid waste? Uh, wouldn’t you know it — that would be the poor.

    Goral, glad you are ok and hope you can quickly recover from the property damage.

  • noelfitz

    Goral,
    thanks for your comments. I hope everything will work out well.

    Mary,
    I am grateful to you also. You took the time to clarify the issues. You are closer to the conditions in the US and know the position better that I do. However let me assure you, and others in CL, that I appreciate constructive discussions and welcome our exchange of views.

    I think CL is excellent and a wonderful resource fur Catholics in these difficult days and would not like to write anything that would upset readers and fail to build us up in the faith.

  • goral

    I for one don’t mind controversy nor do I lose sleep over hurt feelings. As long as the exchanges are respectful and intended to get at the truth, the discussion is worthwhile.

    Like you, Mary, I’m growing weary and impatient with those who use rhetoric of compassion to help themselves to our pockets. I like to say that we have a tyranny of taxation with representation, because the system has been turned against us.

    We also have another problem, and that’s one where big industry and big gov’t together set the agenda for all of us. Top that with a media that is at best ignorant and we have Obama’s version of Gorbachev’s perestroika which is restructuring the US to become another bureaucratic behemoth feeding off the poverty that it will create.

    That’s how cancer grows.

    • Perfect, Goral. I think the “representation” part is failing. As soon as our representatives make it to DC they are under “Don Corleone’s” influence and they represent us only in appearance. The once glorious American press is not much better than Pravda and Izvestia. I find myself reading between the lines in an attempt to see what is it that they are hiding or twisting. That is exactly what my friends told me about the old USSR: it was a constant game of chess to figure out what was going on to protect oneself of the hostile government. What we get from Washington is covert violence against the people. In time the people will react to this violence (they are beginning to do it now) and start pushing against it. It happened that way in Poland. See NINE DAYS THAT CHANGED THE WORLD, the DVD by the Gingrich group about the Polish liberation promoted by John Paul II. The similarities are remarkable.

      I think the “powers that be” are overplaying their game. When the American people awake they are a formidable force that no tyrant will be able to contain. They believe we are transplanted Europeans… how wrong they are!

  • goral

    Another worthwhile comment from someone whose posts I find very interesting.
    Pravda means truth and was the mouthpiece for the Communist Party while Izvestia means information and was the mouthpiece for the Soviet gov’t.
    You probably know that Carlos as I find you knowledgeable in that part world history.

    The private comment on the streets of then Leningrad was that there is no izvestia in Pravda and no pravda in Izvestia.
    As you’ve noted, the truth was always hidden.
    Really not much different than our political doublespeak or what passes for factual, objective reporting by the NY Times which is a liberal mouthpiece and Washington Post which is a mouthpiece for our left wing politicians.

    I’m a bit more pessimistic about us (US), than your last statements but my prayer is that you’re right.

    • NYT and WaPo: I can’t think of a better way to waste good trees… although, wait a minute, we also have The Watchtower, and Awake!
      🙂

      Let us pray for our country. May be we should have a nine year novena, just like the one Cardinal Stefan Wyszy?ski promoted in Poland. It was a clever way to re-evangelize the Polish faithful. That may have seem like nonsense to the Communist apparatchiks but it worked. God hears our prayers when the cause is just.

  • goral

    Clever as a fox.
    Incidently, the title attributed to Stefan Wyszynski as often as the one of – Cardinal was – the Fox.
    He escaped even assasination attempts.
    Christ did entreat his servants to be as wise as serpents.