Reducing Expenditures: Mission Impossible?

From the late 1940s to 2007, total government expenditures in America rose from about 20 percent to more than 30 percent of GDP; total receipts grew from 20 percent to a bit less than 30 percent. Since the recession, expenditures have jumped to 35 percent of GDP. Two economists with the Federal Reserve Bank of St. Louis correctly conclude that “the rise in the federal debt... is entirely a consequence of the federal government’s increase of expenditures without an offsetting increase in revenues.”1 Government goodies financed by public expenditures have multiplied like loaves and fishes. Reducing government expenditures thus appears to be the best solution, if not the only one. But it is politically easier said than done.