Our Bigger Better (?) Government

Keith Hennessey has a series of charts that put today’s budget announcements in perspective. If you have a moment I suggest you click over to review them. The one below is in my opinion the most important of the set that he produced.obama-budget-2011-spending

A lot of the talk today has centered on the size of future deficits. It’s an important topic but not the most important. If you believe as Hennessey does and as I do that the size of the budget and its relationship to the size of the economy is what ultimately matters then this chart is what you need to focus upon. Ultimately, the real impact is the size of the bite that the government intends to put on the economy, not whether they raise the funds to do so via taxes or borrowing. Regardless of where the money comes from, it represents a diversion away from the productivity of the private sector and into the public coffers.

As you can see, the Obama budget is substantially above the budget he submitted in 2010 and represents what would appear to be a permanent increase in the percent of the pie that will be taken to fund future expenditures. Perhaps more to the point, it breaks away significantly from historical norms. The implications of such an expansion of federal spending at the expense of the private sector are largely unknown.

We know from experience that the budget proposal we have seen today is only a starting point. Congress will no doubt add substantially to the baseline and natural disasters, national defense, and all manner of other unforeseen events will drive the numbers higher.

I harbor little hope that either Republicans or Democrats have the will or for that matter the inclination to rein in this expansion of government. It’s pretty much a done deal and all of us will most likely be poorer for it.

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