American Thinker: Sierra Rayne: 'Big Government & Lower Economic Growth'

Source:American Thinker right-wing populist publication.

Source:The New Democrat

"Between 1800 and 1916, total government expenditures in the United States generally ranged between 2% and 3% of GDP.  There were higher peaks for the War of 1812 (5.1%) and the Civil War (13.8%), but in both cases pre-war government spending levels were re-established within about a decade after the end of the conflict.  Even after WWI, the wartime peak of government spending (24.2% of GDP) declined rapidly to a slightly higher than historical spending base (3%) by the mid-1920s. 

And then in 1930, it began: the long, unrelenting rise in government expenditures up to the current levels of >40% of GDP.  Nearly half of the entire American economy has been effectively nationalized.  As recently as the early 1950s, government expenditures as a percentage of GDP were more than threefold lower than at present.  The effect of the Korean War is barely noticeable in this climb.  WWII saw a rapid mobilization/demobilization of the government-based economy, but the pre-1930 low levels of government spending were never to return.

Gross public debt tells a similar story. Up to the start of WWI, the inter-war public debt minima were between 0% and 3% of GDP. Debt was accumulated in wartime, and eventually paid off. Much like after the Civil War, the WWI debt was being paid off until 1930, when the era of permanent big government began. After that, the debt increased from 16% of GDP up to its current level of >100%. The WWII peak came and went within a couple decades, but the relentless march of big government precluded any chance of returning to the state of effectively zero public debt that had existed less than only a half-century before.

What effect has the era of big government had on economic growth?  To definitively isolate government size effects on economic growth is essentially impossible.  Econometrics, like all other applications of multiple regression techniques in the social and natural sciences, is highly dependent on what dependent variables are chosen in the regression, which are left out, any time lags between variables, and how correlative-causative relationships are interpreted.  But what we can say with certainty is that the era of American big government in the latter half of the 20th century and first part of the 21st century correlates with the lowest period of non-major wartime real per-capita economic growth since 1800. 

Using historical GDP and population data from Christopher Chantrill's invaluable USGovernmentSpending.com database, along with corresponding consumer price index data from The Federal Reserve Bank of Minneapolis, the following trend of real per-capita GDP in constant 2012 dollars can be constructed... 

You can read the rest of this article at American Thinker. Or not, completely your choice. 

Republicans like to point to the 1980s as their utopia when it comes to economic growth in the American economy. Even though the Federal Government grew under President Ronald Reagan and the Republican Senate that he had for the first 6 years of his presidency, to deal with the Cold War, as well as the so-called War On Drugs, and rising crime in America. 

Mainstream Democrats (meaning center-right and center-left) like to point to the 1990s as their utopia for economic growth in the American economy. Even though the Federal Government shrunk under President Bill Clinton and the one Democratic Congress (House and Senate) that he had his first two years and the 3 Republican Congress's that he had during his last 6 years. The government shrunk, the budget was balanced, because the Cold War ended and America wanted to pay off its budget deficit. to deal with rising inflation and interest rates from the early 1990s. 

It's one think to say that the American economy would be better off with a smaller Federal Government. The question is: how do you get there? 

You don't see any Republicans calling for gutting the defense budget, and eliminating Medicare, Social Security, Unemployment Insurance, Medicaid, etc. Talking points sound cool in partisan debates. But to govern, you have to live and operate in the real world and be able to accept and deal with reality.