What would the founders think of our spending today?

July 5, 2010

In honor of our nation’s birthday, we thought it would be fun to look back at how much the federal government spent at its start, compared to what it spends today.

Instead of providing year-by-year spending, the historic tables in the budget just provide a total for what was spent between 1789-1849.  In those 60 years, the federal government used up a little more than a billion dollars.  That’s about what the federal government today spends every two and a half hours.

Between 1850-1900, the government spent $15.5 billion.  That’s what the federal government now spends in less than two days.

The Historical Statistics of the United States does provide year-by-year data going back all the way to the founding.  For 1789 to 1781, when the government was in its infancy, spending is aggregated and was just $4.3 million.  By 1800, the federal government was spending $10.8 million per year.

Even when you take into account population growth, the difference in spending levels is staggering.  In 1800, Census estimated that there were 5.3 million people living in the country.  Today, there are almost 310 million. So if you adjust for population size, spending in 1800 was the equivalent of about $632 million.

Those numbers don’t account for inflation.  Inflation wasn’t really a factor for the first 150 years of the nation’s history, and the Bureau of Labor Statistics provides data so that we can control for inflation beginning in 1913. In that year, nearly a century ago, the federal government spent $724.5 million.  Adjusting for inflation, that is the equivalent of $16 billion in today’s dollars.  America had about 102.4 million citizens compared to 305 million today, so adjusting for the size of the population, that’s total spending of $48 billion – or just 1.4 percent of what is being spent today.

Anyway you look at it, it’s obvious that our nation’s founders would be shocked by just how much our federal government spends today.

We don’t have to go back to the spending levels of the nation’s founding—or a hundred years ago for that matter—to make take a big step toward fiscal responsibility.  Simply returning the federal government to the average per-household spending levels of the 1990s (adjusted for inflation), hardly a time of austerity or minimalist government, and we could balance our budget in less than three years.

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