Government for the People; On the Determinants of the Size of U.S. Government
Trends in the size of U.S. government are examined. In the postwar period, general government primary spending rose by Â¼ percent of GDP a year through 1975, stabilizing thereafter. With higher social transfers offset by a lower burden of defense spending, expansion reflected a baby-boom driven rise in education spending. The parallel improvement in tax efficiency helped equate the benefits of higher spending with the costs from higher taxation, in accordance with a marginalist view of the size of government. Looking forward, the retirement of baby boomers appears likely to expand government and lead to a more efficient tax system.
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