Tuesday, September 24, 2013

Government spending over the years



I have total government and state+local government, as a proportion of nominal gdp. Since 1980 we see more government to DC and less to state and local. During the crash we see DC budget climbing, in ratio much higher than state and local.  I would say, going back, state and local spending reached its equilibrium around 1975.

What else? It was decreasing during the Clinton boom years! Imagine that. The answer? Get back to the mean of 1975, drop total government another 5% of gdp, mostly from DC, that is about a 15% hit to budget. Wow! But we are only talking about getting it back to Clinton, he had the right ratio.

The Drum/Krugman argument is that we can do it like lil Bush, but without the crash. But we are damn near crashing right now, the stock bubble looks awfully tippy.

OK, then ask the real question. Is this disparity in federal vs local government the cause of the misery? See how erratic the federal portion is? What happens is the large state rebellion, like LBJ, Reagan, Bush; policies that take large state policies and try them out at the federal level.   These large programs look different coming back to the same large state from the feds, they look bizarre, as if they were fit for a small state. Well duh!! Get a clue bonehead governors of Texas, Florida and California. Big bonehead multiplier less than one, political insanity at its worse.

No comments: