Monday, December 7, 2009

On the Growth of Government (Part 1 of 3)

If you run a business you'll probably compare this year's sales to last year's, to see how much your business has grown. If sales are up 6%, you could say your business has grown 6%.

I want to look at government spending by that standard: year-over-year change.

So I want to look at the growth of government, graphs of the data, and I go to Google Docs and -- surprise! -- My son Jerry has a new spreadsheet there... His data is from and USGovernmentSpending is just what I need! Thanks, Jer.

It's a confusing site at first, but if Jerry can grab data from there, I figure I can too. And do. I like to see long-term trends, so I grab the Federal Spending data since 1900.

Well, nice, but I can't really see much. I see a really big spike for World War One. I see a shorter spike for World War Two. And I see a pretty small spike for the Korean War. Everything else is tiny by comparison. Even President Obama's famous spending increase (blue line, far right) is small by comparison. Smaller than the Korean War spike. We need to zoom in.

So I cropped the data to get rid of the biggest spikes. Figured we'd start in 1949, after the two world wars (and, as it happens, the year I was born).

Well that's a little better. At least you can see the two lines now. The jittery blue line shows year-to-year change in Federal spending. The red line smooths out the jitters by showing an average of five year-to-year changes. (That's why the red line ends in 2008. It's an average of the blue-line points from 2006 to 2010. I don't have data for 2011, so I can't show the red (average) value for 2009 or later.)

But it's not good enough. Most of the points on both lines are somewhere between 0 and 20, as the numbers on the left show. This is not very informative. We need to zoom in more.

So I removed the two biggest remaining spikes, and also the years that show a drop significantly below zero. We're left with a graph of the period 1956-2008.

Now we're gettin' somewhere. You can see the blue line touch zero in 1965, and then spike to 17% two years later. That spike is likely associated with spending for the war in Viet Nam. The next spike occurs in 1975 (23.38%) and the next in 1980 (17.24%). These may be associated with recessions and show "counter-cyclical" spending. The next spikes occur in 1985 (11.1%) and 1990 (9.56%). Then there is a sort of dip or gully, representing the reduced Federal spending growth of the Clinton (Gingrich) years, followed by a lower peak in 2002 (7.94%).

Just before the graph ends you can see the red and blue lines spike in opposite directions. The blue line drops because Federal spending growth in 2007 fell to less than three percent (from 7.4% in 2006). The red line rises because it averages-in the Obama spending of 2009. (The red line then falls in 2008 because it includes the lower growth of the 2010 budget.)

So now we have something to look at.

Part 2 ->

You can access the Google Docs spreadsheet used to create these graphs. (Sheet 1.)

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