Paul Krugman has a good article up on his blog that points out something to keep in mind when we talk about federal spending. I don't have much to add to this because he makes the point clearly and concisely. The fact is that federal spending rose from 19.6% of GDP in fiscal 2007 to 23.8% of GDP in fiscal 2010. So isn’t that a huge spending spree? Well, no. First of all, the size of a ratio depends on the denominator as well as the numerator. GDP has fallen sharply relative to the economy’s potential; here’s the ratio of real GDP to the CBO’s estimate of potential GDP: A 6 percent fall in GDP relative to trend, all by itself, would have raised the ratio of spending to GDP from 19.6 to 20.8, or about 30 percent of the actual rise. That still leaves a rise in spending; but most of that is safety-net programs, which spend more in hard times because more people are in distress. So if you hear conservatives or even liberals harping on spending and they use spending as a % of GD...
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