Spending Drivers

Leading this increase in spending has been acceleration across the board in all categories of spending including non-defense, non-homeland discretionary spending. Elected officials often claim that the War on Terrorism is the leading cause of spending increases. However, according to a recent Cato Institute study, under the time period of the Bush Administration, non-defense non homeland security spending is growing at the second fastest growth rate during a presidential term, 4.8 percent, since 1964. In fact, the spending growth rate exceeds Lyndon Johnson (4.1 percent) and is slightly below Nixon (5.0 percent) who created new departments under his tenure.

Spending for defense and homeland security related items do come into play due to large supplement budget bills that are being passed annually by Congress and signed into law by the President. The supplemental spending bills are considered “off-budget” and not conducted through the budget process. Thus, each year the President puts forward a spending plan which shows spending restrained in the 2.5 percent to 4.5 percent range. Over time, however, the number increases as Congress increases spending and then the supplemental costs are added to the final number.

Since fiscal year 2002, spending above the President’s initial request has equaled $387 billion during five years. This represents 54 percent of federal spending increases enacted and demonstrates the inaccuracy of using the initial spending request to guide where spending will end up in the next fiscal year.

As a result, the acceleration of federal spending has been dramatic. Based on the projected 2006 numbers, the combined inflation adjusted spending increase amounts for calendar years 2001 – 2006 is a six-fold increase above the spending increases for the previous six-year period. In other words, from 1995-2000, federal government spending increased an average of $15.7 billion per year while from 2001-2006 the federal government increased spending an average of $90 billion per year. The difference between the two numbers reflects the average supplemental bill passed in each fiscal year, $75 billion.

Despite Claims to the Contrary, Federal Spending Continues to Surge

The elevated levels federal spending over the past six years have wiped out 51 percent of the unprecedented reduction in the burden of federal spending as a percentage of national income from 1992-2000. Federal spending (as a percentage of income) declined for eight straight years, which reduced government spending from one out of every four dollars of national income to one out of every five dollars.

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