US Federal Spending Since 1900

Federal spending began the 20th century at less than 3 percent of GDP per year. It jerked above 24 percent as a result of World War I and then declined in the 1920s to 3 to 4 percent by 1929. Federal spending started to increase after the Crash of 1929, and rose above 10 percent in the depths of the Great Depression.

Federal spending exploded during World War II to nearly 48 percent of GDP, and then declined to about 15 percent in the late 1940s.

In the Korean War of the early 1950s federal spending increased to over 20 percent of GDP, and then declined to about 17 to 18 percent by the end of the 1950s. In the 1960s federal spending began a slow increase to about 22 percent of GDP in the early 1980s, and then declined modestly to about 18 percent by 2000.

In the 2000s federal spending began a steady increase crossing 20 percent of GDP just before exploding to 24 to 25 percent in the Crash of 2008. In the 2010s federal spending has resuming its growth as a percent of GDP, and then exploded over 30 percent of GDP in the COVID year of 2020.

US Federal Spending since the Founding

Federal spending in the first half of the 19th century stayed typically below 2 percent of GDP except in wartime. In the Civil War, federal spending exploded to 13 percent of GDP. After the Civil War spending gradually declined. It dropped below 4 percent of GDP in 1872 and below 3 percent of GDP in 1880. Thereafter, federal spending hovered between 2.5 percent and 3 percent of GDP until World War I. Federal spending peaked at 24 percent of GDP and declined below 4 percent in the 1920s. Federal spending reached 10 percent of GDP in the 1930s before rocketing to 48 percent of GDP at the end of World War II. From the end of World War II to the mid 1980s federal spending gradually increased from 15 percent to 22 percent and then declined to below 20 percent of GDP by 2000. Since 2000 federal spending has slowly increased as a percent of GDP, with a blip to 24 percent GDP in the aftermath of the Crash of 2008 and a spike to 30 percent of GDP in the COVID year of 2020.

CBO Forecast for Federal Spending

According to the latest forecast from the Congressional Budget Office, federal spending will grow from a little over 21 percent of GDP in 2019 to over 28 percent of GDP by 2049.

Social Security spending is forecast to increase from 4.9 percent GDP in 2019 to 6.2 percent GDP in 2049; Healthcare spending (Medicare, Medicaid and CHIP) is forecast to increase from 5.3 percent GDP in 2019 to 9.3 percent GDP in 2049; All other spending on programs, including Defense, is forecast to decrease from 8.8 percent GDP in 2019 to 7.1 percent GDP in 2049;

Spending on net interest on the federal debt is forecast to increase from 1.8 percent GDP in 2019 to 5.7 percent GDP in 2049.