Part 1: Trends in United States Federal Government Spending
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EmailThis is part of a series where the Center will be exploring federal, state and local government in the United States over the past century
Federal government spending has changed substantially since the early years of the country. The first big increase came during World War 1. Federal spending increased nearly 7 times from 1916 to 1920, going from $760 million to $6 billion. It then fell to nearly $2 billion until about 1935 and the heart of the Great Depression. By 1938, federal spending had increased but only back to the level of where it was in 1920 at $6 billion.
During the World War 2 era, federal spending increased over 6,000% to $45 billion. The U.S. government represented at times close to half of the U.S. economy during the war. After the war, federal spending shifted down substantially. In 1959, total federal government spending was $92 billion. The federal government’s share of the overall economy had dropped to just 18.3% in 1958.
There are two distinct periods in the latter half of the 20th century in federal spending. From 1960’s forward due to cold war spending, the Vietnam War and some expansion of social service programs, the government’s role in the economy grew to about 23% in the early 1980’s. A shift happened in the 1980’s and 1990’s as the federal government’s share of the economy was reduced to 18% by 2000 (back to the 1958 level) and it stayed there until about 2007. Following the Great Recession of 2007-09 and the global financial crisis, federal government spending increased dramatically in response to the crisis starting with President Bush and continuing into the Obama Administration. By 2010, the federal share of the national economy had risen to 25%. This was mainly due to the bank subsidy plans and the major Obama stimulus package. After that early 2010’s period, federal spending returned to the 22% level in the mid 2010’s and stayed there until the global pandemic in 2020.
The Covid pandemic era saw a nearly unprecedented increase in peacetime federal government spending to over 31% of the U.S. economy, a level not seen since World War 2. Between 2019 and 2020, federal spending increased by $1.7 trillion -- about $5,200 per person in the U.S.). The following year, federal spending increased another $400 billion to a record high $9.3 trillion -- about $29,000 per person in the U.S.). This was largely due to the CARES (Coronavirus Aid Relief, and Economic Security) Act and other federal legislation of 2020 and into early 2021 with the American Rescue Plan Act. There were significant increases in housing and community development, income security (over $1 trillion -- about $3,100 per person in the U.S.) and economic and labor affairs. These spending figures are expected to fall back as the national health emergency ends and return to levels in 2019.
