26 January 2008

A Budgetary Experiment

We've been discussing government spending over at the Daily Duck and so I thought I'd grab some data from the NIPA accounts over at the Bureau of Economic Analysis and then calculate and graph government expenditures and receipts, federal expenditures and receipts and national defense expenditures as percentages of GDP. The data starts in 1929, but because of limitations and changes in the data, this chart starts in 1960.

Because I wanted to play around with Excel a little bit, I've posted the original chart and data on the web. Feel free to play around with it. (This will likely only work if you have Excel and IE, and maybe not even then.)

Ask and ye shall receive. This gives us some historical perspective, but I don't know that this is a particularly useful statistic. Comparing national debt to GDP is something like comparing the total amount of your mortgage to your annual income. For that reason, I threw in interest paid as a percent of GDP.

I've also added OECD data for governmental debt as a percentage of GDP.


Duck said...

I'd be interested to see a graph of both federal and governmental debt as a percentage of GNP. Have you seen any diagrams like that?

Duck said...

This is not a great graph for Republicans. Federal expenditures as a percent of GDP dropped steadily during the Clinton years and then started growing during the Bush years. Who's the spending party?

Duck said...

Thanks David. I'm not convinced that the national debt is of no consequence, but that's why I wanted to see the trendline to see how the current situation compares to historical levels.

We are at the high end of the historical scale, though it looks like the dept peaked in 1998 as % of GDP, descended until 2002 and is now forming a secondary peak that is lower than 1998.

Also noteworthy is that the trough from late 1960s to 1981 corresponded to the slow growth, stagflation period.

How do they define nonintergovernmental debt? Are they subtracting debt owed by one governmental entity to another?

David said...

Nonintergovernmental debt is US government debt held by entities other than the US government; that is, debt other than the social security and medicare "trust funds." Since I think that social security and medicare taxes are just general taxes, used for general purposes with only notional trust funds that, when they are drawn down, will have to be paid out of then-current taxation, I think that nonintergovernmental debt is the right debt to look at.

I'm not saying that national debt is of no consequence. I am saying that deficit spending and national debt at anything approaching our current levels have no identifiable economic effect. Nor are we anywhere near "bankruptcy."

I also doubt that lower government spending, all other things equal, is inherently conservative. Worrying about deficits qua deficits makes us the tax-collectors for the welfare state. I'm not in favor of less spending if the spending that is being cut is spending that I favor. I wish that the government did less, for reasons of both ideology and efficiency not because spending is bad or because I'm afraid of the national debt.

Ali said...

What figures did you use to make up gross financial liabilities?

I'm a little shocked by Japan's spending. They went craaaaazy.

David said...


It's an OECD number that's more or less equal to total debt as reported by each OECD country. The US number is slightly overstated compared to most other OECD countries because it includes the vested portions of public employee pensions, which other countries don't include.

You should be able to find the source data here.