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The Federal Budget: How Big is Too Big?

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Robert Fagin, Richard delaMenardiere and Robert Doyle
May 1, 2023

Thomas Jefferson once stated: “If we can but prevent the government from wasting the labours of the people, under the pretense of taking care of them, they must become happy.” 

About 63 percent of the federal budget is mandatory spending, 30 percent is discretionary spending and the rest is interest payments on debt. In 1970, only 31 percent of the federal budget was spent on mandatory programs, while the rest funded an array of discretionary programs and net interest.

What has happened in the 53-year interval? Several factors are involved.

Population is a big factor. In the past 50 years, our population went from 205 million to 330 million.

Inflation has its impact on the Federal budget. One dollar in 1970 bought what requires $7.44 today.

The national debt stands at $31 trillion and it takes $210 billion to service the debt (more as interest rates rise). That also represents 15 percent of the total federal budget for debt service. In 1970, per capita GDP was $5,234. In 2020, it was $63,500. It is noted that the growth of the GDP has occurred over a larger pool of people, thereby making economic growth proportionally immense. However, since 1970 the average working family has had stagnant growth in their income levels, while upper income levels have seen significant growth—and a disproportionate share of that growth can be attributed to tax changes occurring during this period.

In the 30 years following World War II, hourly compensation of the vast majority of workers rose 91 percent, roughly in line with productivity growth of 97 percent. But for most of the past generation (except for a brief period in the late 1990s), pay for the vast majority lagged farther and farther behind overall productivity. Between 1970 and today, the portion of Americans who live in middle-income households fell by 18 percent.

What is a “poor” nation to do? The authors would sum this situation up by saying that, in large measure, the nation’s citizens inadvertently have delegated up to the federal government the responsibility for all of the ills experienced in all of our communities. We say “delegated up” to reflect that citizens do not want to have to defend raising taxes to pay for their desires from their fellow residents. It is far easier to blame distant “Washington, DC” for the result. Similarly, it is far easier to vote for aggregate problems around the country than for those in one’s own backyard.

There is no simple solution, or we wouldn’t be in the fiscal fix we are in, and politics alone won’t fix it. Typically, representative democracies around the globe wait for a catastrophe to land on their doorstep to be moved to action. We do have a suggestion to help think through the righteous problems of the national government vs. local government: Put a group of non-partisan economists, public administrators and experienced, elected officials in a locked room to address the following question: What do the American people want their federal government to do (and not to do)? This group of government and economic experts would sort out the best locus for the attack on specific issues. Local problems would then be determined by state and local officials. No, this won’t be easy. Much debate would ensue and there would be fights over process and financing. Such a review would force more concern about the true need and cost to deliver near where the delivery point exists vs. today’s situation where extracting the largest possible amount becomes the goal.

We believe such a review would reveal the inefficiencies in the current model, where the cost and need are far separated from one another and accountability for the outcome is too far removed from those charged to deliver the money to attack the problem successfully. It is the authors’ thesis that such challenges are best met at the point at which the myriad problems individual citizens face present themselves.

Yes, there are many implications in what might emerge, but are any of us happy with what we have today? Wouldn’t at least the examination of the problem and possible solutions/improvements be of value?

As Thomas Jefferson stated: “To preserve our independence, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude.

Author: Robert F. Fagin is a retired federal Senior Executive Service (SES). He received his BA from the  University of Virginia and his MPA from American University. His service included U.S. government Senior Executive Service (SES), Administrative Management; vice president, finance and administration, University of North Florida (UNF); treasurer, UNF Foundation; executive director, chief financial officer for Palm Beach County, Florida. He can be reached at [email protected].

Author: Richard E. delaMenardiere received his BS from the University of South Florida and his MS in management systems from American University. His service included Lieutenant Colonel in the U.S. Air Force, Systems Acquisition and U.S. government Senior Executive Service (SES) manager of procurement, grants and facilities. He can be reached at [email protected].

Author: Robert E. Doyle, Jr., received his BA from College of the Holy Cross and his MPA from Southern Methodist University. His service included U.S. government Senior Executive Service (SES) manager, chief operating officer, director of finance and management and senior advisor of major federal agencies. He can be reached at [email protected].

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