I’ve apparently managed to confuse some people in my post yesterday about federal government spending and taxing as a share of the economy. Though to be fair to myself, always a good practice, it looks to me like those people a) don’t read my stuff (unforgivable!), or b) don’t want to face historical facts.
First, reviewing those facts, I’ve got historical data from OMB on federal receipts and outlays as a share of GDP since 1930, which I’ve plotted below, along with a line at 20%, the rough avg for both series. The WWII spike is obvious and you should also note the spike at the end as we, including yours truly, temporarily expanded spending to fight the Great Recession. But outside of wars and downturns, the range is as you see it.
That does not and should not—I’d say must not—restrict the future. A key point of my work is that when it comes to our fiscal future, we mustn’t succumb to the tyranny of the historical average. I’d urge those who are unaware of this to dig much more deeply into my scribblings before concluding that describing the past is the same as endorsing the past.
But continuing this description of the way things are—this is the path dependency point from yesterday’s post—check out this OECD figure on tax receipts as a share of GDP by country. This includes both federal and state spending, as it should.
Those progressives who both discount path dependency (not me) and want to see us move up in that chart (yes me!) believe we can or at least we should fight for jumping from the bottom to closer to the top.
As I wrote yesterday, go for it! I’m not the chin-stroking, finger-waggling pundit saying “give up, you’ll never get there!” And it is glaringly obvious to me that for lots of reasons, we will need to raise more revenues to meet both demographic and a whole set of other challenges, including climate, poverty, immobility, infrastructure, health care, retirement security, and more.
I’m just more path dependent than you are. That doesn’t mean we have to stay on the path we’re on, Buddha willing. It does mean, to me, that the better path with true access is in the same general part of the woods as the current one.