It looks like you're using an Ad Blocker.

Please white-list or disable in your ad-blocking tool.

Thank you.


Some features of ATS will be disabled while you continue to use an ad-blocker.


MW: The ‘government grab’ chart is startling

page: 1

log in


posted on Feb, 21 2011 @ 11:04 AM

The government burden is the higher of federal spending, which we call the “government grab,” and total federal revenues, which we call the “tax take.”

So how does the federal fiscal furor look from this calm, balanced, mature perspective?

Well, looking at the graphic it’s still pretty darn startling, actually. The fiscal-year 2011 federal deficit seems likely to be up very dramatically, 10.9% of GDP — far higher than the deficits run in the 1930s, during the Depression, and in the early 1980s, during the much-maligned first Reagan Administration. In fact, it’s over a third as high as the deficits run during World War II.

More importantly (in our view), the “government grab” — in this case, federal spending — is now 25.3% of GDP. That’s the highest ever in peacetime.

And, in addition, state and local governments will spend some 11.2% of GDP in 2011. (Not shown.) That takes the total government grab in the U.S. strikingly close to the 40%-plus level typical of the social democracies of Europe.

Some amplifications are in order:

The dramatic leap in spending beginning in full-year 2009 was exacerbated by the Great Recession, which shrank the denominator — the underlying economy — as well as triggering counter-cyclical government spending programs, like unemployment benefits. Of course, this does not make it any less real.

Although the government grab’s magnitude is unprecedented, it may not necessarily be irreversible. There was a prolonged decline in the government’s grab beginning in the late Reagan years (through 1988), culminating in the surpluses of the late Clinton years (through 2000 — when, of course, executive and legislative branches were helpfully gridlocked between the parties).

By an amazing coincidence, the government grab and the federal deficit increased under both Bushes (1988-1992 and 2000-2008). It seems to be a sort of family tradition. ( See March 10, 2008 column.)

In the past — for example, after World War II — the economy recovered from huge federal deficits without ruinous inflation. The key question is whether the deficits are financed through borrowing or monetized. But it has to be noted that the monetization of incomparably smaller deficits in the 1960s and 1070s caused last chaos.

Bottom line: yes, America, there really is a fiscal crisis. It can probably be solved. But it may take a shutdown, and worse.

Tax receipts are a reflection of the economy. Taxes are a percentage of income and property values and transactions. The tax rate really is how big a percentage they're taking.

Obviously the problem is spending too much. Serious spending cuts have to be made for the nation to survive.

Looking at the headlines lately, I wonder if political strife created so that the dollar keeps it's value artificially high, for now.

posted on Feb, 21 2011 @ 11:24 AM

off-topic post removed to prevent thread-drift


new topics

log in