The Wall Street Waltz: 90 Visual Perspectives, Illustrated Lessons From Financial Cycles and Trends, Revised and Updated Edition

Chart 76

Government Growth: The Big Picture

This chart gives the best overview I've seen of government growth. It spans from George Washington's administration up to the 1950s. At the top are the Presidents' terms of office. The chart shows national income (adjusted GNP), federal debt, expenditures, and revenues (taxes). Over the entire 163-year time span, both spending and taxes seemingly grew from about $7 million to about $100 billion—an average annual growth rate of about 6 percent. Federal debt grew from about $98 million to about $300 billion—a growth rate of about 5 percent per year. And national income grew from $950 million to about $300 billion—an average annual growth of 3.6 percent. Since then, the post-1950s double-digit growth rates (see Chart 80) raised the federal budget to about $1 trillion. Tacking that on provides us the longest-term growth rate measurable for the U.S. government (196 years), yet it still averages 6 percent. Cameoed in the upper left are debt and expenditures per capita, which grew about 2.8 percent per year—conveniently, just slightly less than GNP.

An interesting period is the 1830s. For the only time in U.S. history, federal debt disappeared completely. Following the lead of Andrew Jackson's populist philosophy, the government repaid the federal debt completely from the proceeds of selling Western lands to a speculation-hungry populace. Investors believed they were buying America's future. They were, but a few decades too early. Before Jackson's ...