The Growth of Government Spending in the Twentieth Century
Special Report No. 93
Executive Summary Since the beginning of the twentieth century, governments in the United States have become increasingly involved in the lives of Americans. One indicator of this growing involvement is the increasing fraction of the overall economy that is comprised of government expenditures.
Government expenditures as a percentage of GDP have growth exponentially since the beginning of the century. In 1900 total government expenditures equaled 5.5 percent of GDP. By 1992 this figure had increased more than six fold to 33.1 percent. This year government expenditures will have dipped to 28.9 percent of GDP.
The composition of government expenditures has also changed dramatically over time. At the turn of the century most government spending was used to pay for education and training, national defense, and interest payments. Today much government activity involves transferring income from one group to another. This year transfer programs are expected to account for 41.6 percent of government expenditures, a figure that was just 3 percent in 1900.
The relative size of the various levels of government has also changed dramatically since 1900. At the time, the bulk of government spending, 57.8 percent took place at the state and local levels. Today the federal government spends more than twice as much as all the state and local governments combined.