Understanding the US by Numbers: A Small Government
Published December 12, 2006
The US federal budget is larger than that of any other country in absolute dollar terms. The US federal government spends more than $2.3 trillion every year or about $500 billion dollars more than Japan, which boasts the second largest budget in the world at around $1.7 trillion. Yet, if we look at the numbers a little more closely, we can see that by some measures the US federal government is indeed small.
The US government's footprint in the economy, as measured by ratio of budgetary expenditure to GDP, seems comparatively much lower than that of developed European economies. The US federal budget of about $2.3 trillion is about one fifth (.197) of its $12.5 trillion GDP whereas the average budgetary expenditure to GDP found in developed countries in Europe is on average twice as much. For example, the UK's budget is $951 billion or nearly half of its $2.228 trillion GDP while France's budget is $1.144 trillion or a little more than half of its $2.055 trillion GDP.
The US's budget (or budgetary expenditure) to GDP ratio is closer to the ratios found in the developing world, for example, India's GDP of $720 billion is nearly a five times bigger than its budget of about $135 billion. Surprisingly, US's ratios also match the ratios of its socialist leaning northern neighbor Canada, which one would imagine would share more with developed European countries than with the US.
Petro-economies like that of Saudi Arabia have budget to GDP ratios that fell between those of the developing world and the developed economies in Europe. Petro-economies also fell in the middle in terms of budgetary dollars spent per person. Nigeria is a major exception in this regard, though poor governance and large scale corruption explain much of it.
In terms of goverment dollars spent per person, the United States is far behind developed EU economies; the budgetary allocation per person in EU is more than double that in the US. This can be interpreted as a sign of small government.
There are three key caveats in considering these figures and analyzing what they mean. The first is the quesiton of whether the ratio of federal budgetary expenditure to GDP is in fact a sound measure for the size of government. One could argue that the federal budget in absolute dollar terms is a better measure for the sheer size of government. The problem with using absolute dollar amounts alone is that they reveal as much as they hide. The size of budgetary outlay, though most strongly dependent on GDP is also impacted by population size, tax receipts and much more. The ratio of budgetary expenditure and GDP provides us with a useful measure to estimate the impact (or contribution) of government spending on the economy.
- Understanding the US by Numbers: A Small Government
- Published: December 12, 2006
- Type: Opinion
- Section: Politics
- Filed Under: Politics: Government, Politics: International, Politics: U.S.
- Writer: Spincycle
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I don't see Europe as something to aspire to.
Great empires become bloated not by time, but by regulation. The Roman Empire became top-heavy and lost its innovation. It was a couple of centuries before its neighbors noticed, but when they did, Rome fell. Chinese dynasties built themselves up and eventually crumbled internally. When Spain and Portugal got lazy, England made its move.
Today, we've got the Western World in contention with Islam. Why? Because Europe is showing weakness. They're unproductive and rely on their governments. No suprise that Asia smells blood in the water. Islam is right; they can mop the floor with Europe. But they made the mistake of taking on both Europe and the US. There's still a lot of prosperity and growth potential in the US. America will defy the rest of the world - I think - and Islam won't get much more than Paris and Brussels.
If I read this article correctly, the implication is that we shouldn't be afraid to embrace a European-style bureaucracy. Development is, after all, the process of becoming less like Indonesia and more like Europe. I believe that such thinking would be catastrophic.
So we are spending less as measured as a percentage of GDP AND we (as individuals) have more control of the budget through our vote than citizens of other nations?
Come April 15, I will try to remember that...
Baronius,
I agree with your point about Europe. I DO think we can learn from European mistakes, but we shouldn't emulate them. I don't see much over there to emulate these days.
This information will make tax day a bit less painful. But given how painful it is and how much more our government spends than it needs to, this article makes me truly horrified at the conditions of oppression which most of the rest of the world lives under.
Dave
Very interesting article. I'd be interested in seeing this broken down further to see if the disparity can be shown tied to a particular area, e.g. Defence, welfare, infrastructure, etc. or if it's equal across the board.
Europe is a terrorist country!!!
i agree with Courtney!!
This is a good example of falsified propaganda. A part of budget is compared to a whole budget of other counties.
For the USA, a small part of budget (federal part, practically not used for US life but for other purposes) was used. A multiplier of ~ 2.5 will appear if state budgets (they pay for the US needs) will be added. And the whole budget, with counties and citied will go to 55 to 70% of GDP.
Why do not take a federal budget of some another federal country, like "high budget" Sweden and find out, how much higher in reality the USA federal budget?
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As a Canadian I am pleasantly surprised to note that our ratio is the lowest of all cited here. I would be curious to hear what might be said by our right leaning critics of "big government" in Canada. It seems to me that the criticism is unfounded judging by the numbers.