| By 2000, average Americans worked 15.4 days less of the year to pay off their federal spending burden than in 1992. In just the past six years, however, 51 percent of that gain has been eliminated. Accordingly, 67 percent of the total cost of government increase since 2000 is due to the increases in federal spending.
51 Percent of Spending Reductions GainsHave Been Wiped Out Since 2000
Special Focus: Spending and the Federal Budget Deficit
Federal spending is the main culprit driving up the federal budget deficit increasing 210 basis points per year above national income growth. As the chart below demonstrates if spending growth was held to national income growth over the past six years, the federal budget deficit would be in surplus at the end of this fiscal year rather than finishing with a $300 billion deficit. In fact, 70 percent of the accumulated budget deficits since fiscal year 2002 is the direct result of total spending increasing above the rate of national income growth.
Federal Budget Would Be in Surplus in 2006 If Spending Was in Line With Income Growth
Yet, national income may not be the correct barometer to measure fiscal health. In the 1990’s if spending had increased in line with national income growth, the budget would never have entered a surplus even with record amounts of tax revenue pouring in. The budget surplus materialized only because spending increased below national income growth as the chart shows.
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