Why This Is the Age of Small Government (Sort Of)
By one important measure spending is at a 50-year low.
With the president's budget released on Wednesday, all the plans, Democratic and Republican, are in. And under each, nondefense spending—funding for many of the government's most-visible operations—will reach a 50-year low.
Here’s an explanation we wrote when the Senate Democrats and House Republicans released their budgets in March:
Every year, the government spends money in two broad categories. The first is funding that has to be approved annually by Congress, or discretionary spending. The second is funding that does not, known as mandatory spending. Most of the mandatory spending goes to Social Security and to Medicare and Medicaid, the latter of which are among the key drivers of the country's debt. In other words, the “debt crisis” that many politicians decry... is in large part the result of runaway future health care spending.
Of the money approved annually by Congress—discretionary spending—about half goes to defense. The other half goes toward things like government operations, law enforcement, education, transportation, national parks, research, and welfare programs. Historically, those nondefense discretionary programs have accounted for about one-fifth of all spending. But, as a share of economic activity, that spending is about to dip to its lowest levels since 1962.
In the last 50 years, nondefense spending has never accounted for less than 16 percent of total spending. But it would shrink to 11.5 percent by 2023 under the White House or House Republican budget plans. It would also reach a 50-year low as a share of economic output.
That's a continuation of a trend: Over the past five decades, discretionary spending (defense and nondefense) has taken on a smaller and smaller share of overall spending while mandatory programs have accounted for more and more of it. The nonpartisan Congressional Research Service laid it out pretty simply in a 2010 report.
With more and more baby boomers retiring, the problem is only going to get worse. You can compare all the possible budget outcomes in the chart here.