A couple days ago Mike Konczal posted a Congressional Budget Office graph of Federal receipts and outlays relative to GDP, a graph, he wrote, we should “keep in mind about the current budget situation.”[i] I found the graph insightful but thought I’d like to see a longer timeline.
The revised graph, given here, starts with 1929, goes through the Great
Depression and World War II, and on to September 30, 2012. Looking at those 84 years, my first observations are: there are far more outlays greater than receipts than going the other way, over 80% of the years we spent more than we took in; from the end of WWII through 1974, outlays and receipts were tightly coupled; a persistent divergence begins with 1975 and except for the final bubble years continues to the present; after the peak in 2000, average receipts trend downward and outlays trend up; and the Great Recession, which we’re still experiencing regarding jobs, foreclosures, and debt, has the second highest deficit spending, though that’s improving.
This extended display of receipts and outlays gave me a better sense of context for where we’re at now (the deficit has been worse—I knew that but it helps to see it—and deficit spending has been the rule, especially for 34 out of the last 38 years). It added to my understanding. Hopefully it will also add to yours.
Notes: All of the data came from FRED[ii] except the 2012 estimates, which are from the November 2012 CBO Monthly Budget Review.[iii]
A PDF of this post is here.
Added on Jan 26: There’s a similar chart at the Tax Policy Center but it includes state and local receipts and expenditures. The graph given above is just federal. So if your interest is, e.g., the Federal deficit, then the above graph is germane.