Thursday, March 08, 2012

Washington Gridlock Is Good: Reduces Spending Growth

In a 2011General Accounting Office study, the authors found unnecessary duplication in 81 areas of the federal government. For example, there were 53 programs to assist entrepreneurs, 15 programs to support unmanned aircraft, and 55 programs to fund freight transportation projects.

How much did unified government, whereby the Congress (both the House and Senate) and the White House are controlled by same party contribute to the redundancy of programs and excessive federal spending growth as gener-ally believed? In 1943 in the middle of World War II, federal spending as a percent of the U.S. economy, or gross domestic product (GDP), was 26.5 percent. By 1948, the federal spending to GDP ratio had de-clined to a low of only 14.4 percent. However, the ratio soared to a post WWII high of 25.5 percent in 2010.

Since 1943, divided government, or what is often termed gridlock, resulted in federal spending as a percent of GDP growing by 0.11 percentage points per year while having the same party dominating both Congress and the White House produced an expansion of 0.16 percentage points per year. Thus, gridlock did tend to restrain the growth in federal spending.

Furthermore during this 69-year period (1943 to 2012), when Democrats controlled Congress and the White House (12 two-year Congressional periods), federal spending as a percent of GDP grew by an average of 0.16 percentage points per year. When Republicans controlled both Congress and the White House (3 two-year periods), federal spending as a percent of GDP expanded by a lower average of 0.10 percentage points per year. Since the end of WWII, the greatest expansion in federal spending as a percent of GDP occurred between 2008, when federal spending as a share of GDP was 21.8 percent, and 2010 when the percent advanced to 25.5 percent, or an annual growth of 1.7 percentage points per year.

Contrary to the hypothesis, this was a period of divided government with the Republicans in control of the House, and the Democrats in charge of the White House and the Senate. Ernie Goss.

1 comment:

Anonymous said...

I thought that Democrats controlled all three branches of Government from 2008 (when Obama was elected) until 2010 (when
Republicans won the House). This would be confirming evidence of your hypothesis that gridlock is good at reducing the size of government and one-party control is bad. Why has no one else commented? Tom Burns