NCPA - National Center for Policy Analysis

Is Federal Spending Profligate?

January 12, 2004

The liberal Center on Budget and Policy Priorities (CBPP) disputes reports from the conservative Heritage Foundation that have concluded federal spending in general and domestic spending in particular are growing at explosive rates.

According to the CBPP, while federal spending has risen in the past few years, it remains far below peak levels as a share of the economy:

  • Federal spending equaled 19.9 percent of Gross Domestic Product (GDP) in fiscal year 2003, which was a lower percentage than in every year from 1975 through 1996.
  • Nearly two-thirds of the increase in spending in 2003 that has resulted from actions of federal policymakers since January 2001 occurred in the areas of defense, homeland security and international affairs -- including expenditures in Iraq and Afghanistan.
  • If the pending omnibus appropriations bill is enacted, total appropriations for domestic discretionary programs -- that is, not including entitlement programs like Medicare and Medicaid --outside homeland security will be $6 billion lower in fiscal year 2004 than in fiscal year 2002, after adjusting for inflation.
  • Total appropriations for all discretionary programs -- including defense and homeland security programs -- will rise 3 percent in fiscal year 2004 before adjusting for inflation, and just 1.1 percent after adjusting for inflation.

The CBPP doesn't dispute factual claims by Heritage analyst Brian Riedl -- who found, for instance, that federal expenditures per household, after adjusting for inflation, are at a post-World War II high. It says that such claims are misleading.

Riedl also found that increases in domestic spending account for 55 percent of the total increases in spending since 2001. But the CBPP points out that his figures include increased expenditures for programs such as unemployment insurance and health care that occur automatically.

Source: Robert Greenstein, David Kamin, Richard Kogan and Joel Friedman, "Is Domestic Spending Exploding? An Assessment of Claims by the Heritage Foundation and Others," January 7, 2004, Center on Budget and Policy Priorities. See also Brian Riedl, "$20,000 per Household: The Highest Level of Federal Spending Since World War II," Backgrounder No. 1710, December 3, 2003, Heritage Foundation.

For CBPP study


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