By analyzing budget figures for the last 106 years I arrived at Five indisputable laws of government growth:
1. If left unchecked the modern state will continuously grow, voraciously consuming an ever greater share of our economic output. In simple terms, no matter how fast the economy grows, it will always be outstripped by the growth of government spending.
Between 1903 to 1948, the GDP expanded 10 fold (1,039.38%), from $25.9 billion to $269.2 billion, while government spending expanded 31 fold (3,128.97%), from $1.76 billion to $55.07 billion. Government spending as a share of the GDP grew from 6.8% to 20.46%.
And from 1989 to 2009, the economy grew by 260.57%, from $5,484.4 billion to $14,291.0 billion, while government spending expanded by 356.14% from $1,794.49 billion to $6,390.94 billion. During this time Government spending grew from 32.72% to 44.72% of the GDP.
2. As the growth in government spending outstrips economic growth, so shall the national debt expand both in absolute terms and as a percentage of the economy.
In 1903 the national debt was 8.5% of the GDP or $2.2 billion in absolute terms. During WW II it surged to 121.2% of the GDP, dropping to a post war "low" of 31.67% of the GDP in 1974 or in absolute terms $475.05 billion.
But, from 1974 to 2008, the national debt grew from 31.67% to 69.93% of the GDP, or in absolute terms from $475.05 billion to $9,986.49 billion (21 fold).
And through Obama's great changes, the national debt grew from 69.93% to 88.90% of the GDP, or in absolute terms from $9,986.49 billion to $13,247.99 billion.
And according to government projections, by 2010 federal debt is projected to expand to 94.47% of the GDP, or in absolute terms $14,077.92 billion.
3. As the growth of government spending expands as a percentage of the GDP, the growth potential of the productive economy will decrease. This combination accelerates the expansion of the national debt.
4. If left unchecked, government regulation will continuously expand. Under (so-called) conservatives this growth is merely slowed and under committed "progressives" the growth is accelerated. Economists are in agreement that an increase in the regulatory burden equals a net cost to the economy.
In 2001, under the "de-regulatory" administration of George W. Bush, some 64,438 pages of regulations were added. And in 2007, more than 78,000 new pages were added. This equals a regulatory growth of nearly 70%. We can only imagine what Obama will accomplish.
Between 2000 to 2004 the direct cost of regulation (the budget of federal regulatory agencies) grew from $27 billion to $37 billion or (adjusted for inflation) 36%.
And between 2000 to 2004 the financial burden of government regulation grew from $545 billion to $648 billion or (adjusted for inflation) by 19%.
5. As government spending increases, the rate of return dramatically decreases.
For example, between 2001 - 2006 the Department of Education's spending on elementary and secondary education increased by 40% and between 1995 - 2005, federal spending on higher education increased by 100%, yet by no measure has the quality of education improved during that time period. This presumably stems from the fact that a large portion of resources are consumed by government bureaucratic structures.
By every measure the historic growth of government spending, the federal deficit and the regulatory burden is unsustainable and will have disastrous economic consequences. And the only change that Obama has heralded is accelerated government growth that will only hasten the head on collision between political desires and economic realities.
The only way to avoid this inevitable disaster is through a return to the constitutionally mandated principles of limited government established by the founding fathers.
http://www.usgovernmentspending.com/us_20th_century_chart.html
http://www.mercatus.org/PublicationDetails.aspx?id=26426
http://www.usgovernmentspending.com/federal_debt_chart.html
http://www.ic2.utexas.edu/dmdocuments/echeverri-2008-Regulation-Competitiveness.pdf
http://www.heritage.org/research/education/ednotes49.cfm
http://www.berglas.org/Articles/parkinsons_law.pdf
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