2011 Per Capita Budget Highest Ever

http://wmbriggs.com/blog/?p=1828 ^ | William M. Briggs

[mattstat]

President Obama submitted the 2011 fiscal year budget.

If Congress passes it—and history shows that the approximate amount requested is usually granted—then this will be the highest the USA has ever spent, not just in real dollars, but inflation-adjusted per capita dollars.

The reason to adjust for inflation is obvious. But you don’t usually see the adjustment per citizen. In 1901, there were roughly 78 million citizens; by 2011 this will have increased to about 313 million.

Just because of population increase, ceteris paribus, we would expect total (inflation-adjusted) spending to increase by four times.

More people means more money must be spent to keep the same level of government services per person. On average, more people also means that there is more money that comes in to the government.

So an increase in population does not imply that per citizen spending should increase. If per citizen spending does increase, as you will soon see it has, something in the nature of the citizen-government relationship must have changed.

A plausible argument can be made that the state of the world is not the same now as it was at the dawn of the twentieth century, and that the observed increase in political and technological complexity would naturally mean that more per person should be spent now. These increases in complexity or necessity can also be, as in the case of wars, temporary.

However, a better argument is that an increase in government power and restrictiveness combined with the penchant of democracies to form cliques that wantonly vote themselves funds from the coffers will inexorably drive per citizen spending upwards until a crisis is met.

This picture shows the amount of spending (in 2008 dollars) per citizen from 1900 until 2011...

[Tarpon]

It’s amazing that all those people in foreclosed houses didn’t think of the obvious answer, just spend their way out of their troubles ...

[ClearCase_guy]

All within the state, nothing outside the state, nothing against the state.
--Benito Mussolini

[DrC]

“So an increase in population does not imply that per citizen spending should increase. If per citizen spending does increase, as you will soon see it has, something in the nature of the citizen-government relationship must have changed.”

I’m sympathetic to the general argument, but this reasoning is flawed. Productivity rises 1-2% a year, which means that wages per worker can rise without needing to increase the prices of the goods they produce. But government doesn’t have the corresponding productivity increases, e.g., it still requires a judge and jury of 12 to convict someone of theft etc. But if you want competent judges/public administration, etc., wages have to keep pace with the rest of the private sector where productivity increases rise rather steadily.

Thus, even a very limited “night watchman” state would cost more per capita in 2010 than it did in 1900 even if its functions were identical in both years. Government as a % of GDP is probably a more realistic gauge of the degree to which a nation’s resources are diverted into non-productive uses by the ‘beneficent’ hand of government.

[ncfool]

Obummer has the back of the unemployed in America.... This will help the rats in November.

“The first $2,400 of unemployment benefits are taxable, in 2009 that amount was tax-free.”