Is Federal Spending Exploding?
Some tax-cut proponents argue that federal spending is exploding, and large tax cuts are needed to prevent further explosive spending growth. The budget data do not support these contentions. In fiscal year 2000, federal spending equaled 18.2 percent of the economy (i.e., of the Gross Domestic Product). This was the lowest such level since 1966. Moreover, the Congressional Budget Office projects that federal spending will drop further, to 18.0 percent of GDP this year. Under the Bush budget, federal spending would drop to 15.7 percent of GDP by 2011. This would be the lowest level since 1951, half a century ago. Similarly, discretionary spending stood at 6.3 percent of GDP in 2000 and is projected to remain at this level in 2001; this is the lowest such level on record. (These data go back to 1962.) Under the Bush budget, discretionary spending would fall to 5.2 percent of GDP by 2011, setting new record lows. Table 11 Tax Cut as a Percent of After-Tax Income (when fully phased in) Top
