A Closer Look at Spending

Back in June I posted some graphs that I created based on data from the Federal Reserve Bank of St. Louis.  The point was that the government seems to have the same problems with discipline as many citizens. Their appetite exceeds their resources. They spend for today often without distinguishing between wants and needs while pushing the consequences to the future - sometimes referred to as kicking the can down the road. 

A close look at the numbers shows that moderate austerity should have been fairly easy and that following a more conservative pace would have left the country in a much better position. 

Last time I posted this message on a Friday, and it ran over a weekend.  I thought the information was important enough to show again.

   

My source was the Federal Reserve Bank of St. Louis website: quarterly government expenditures and receipts, seasonally adjusted from 1^st Quarter 1990 to 1^st Quarter 2018.

The first graph shows government expenditures.  There is an apparent acceleration in spending shortly after 2001. The slope changes noticeably. 

The next graph shows that the increased spending was real and sustained.  By taking the average quarterly increase for the 1990 to 2000 and applying it to the rest of the data, I showed (in red) what would happen if the spending had increased at only the same percentage rate.  It's still an increase but not nearly as steep. (The blue shows actual spending from the above graph, so the apparent increase was real!)

That's the spending story.  Now see what happens when we add government receipts (overlaid in green). There was a budget surplus in the late 1990s and even with the tax cuts of 2001, there would have been another from 2006 to mid-2008, had the spending not gotten out of hand.  And again around the 2013 - 2015 time frame any deficit would have been minimal.

Just like that new car or vacation we can't really afford, the new government programs seem to be too tempting to pass up. It seems painless because borrowed money today doesn't have to be paid back until later. But as we know from our personal experience the consequences are just around the corner. Unfortunately the decision makers may be long gone when any government consequences arrive. It will be our children and grandchildren left to pay the bill.  This shows a lack of discipline, perspective and responsibility