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The Myth That Big Government Is Big

In 1966, the budget for the federal government was 134.5 billion dollars ($656.1 billion in chained 2005 dollars). In 2011 (the most recent year where annual information is available), the federal budget was $3.603 trillion ($3.1786 in chained in 2005 dollars) or 4.8 times what it was in 1966 in real terms.

Similarly, GDP in 1966 was $787.1 billion ($3.8421 trillion in chained 2005 dollars) and $15.0757 trillion in 2011 ($13.2991 trillion in chained 2005 dollars) or some 3.5 times the 1966 GDP in real terms.

Finally, the US population in 1966 was 196.560 million versus some 315 million currently (or an increase of 1.6 times the 1966 population).

So we can see that per capita, real GDP more than doubled over this period of time and government outlays tripled (part of this increase is in response to ongoing effects of the 2008 meltdown). But why am I talking about 1966 at all?

Because there is one other number I would like to cite from 1966: the civilian federal labor force. In December 1966, it numbered 2.799 million. In December 2012, exactly 46 years later, there were 2.794 million civilian federal workers. The following chart shows that compared to state and local government, employment in the federal government has been flat for decades.

State work forces increased 2.3 times from 2.220 million in December 1966 to 5.072 million in December 2012. As did local government increasing from 6.237 million in December 1966 to 14.059 million in December 2012. When the Washington elites rail against Big Government, they create (deliberately I would say) the impression that the size of the federal work force has grown dramaticly, even astronomically, but this is a complete myth, a convenient and false shifting of attention and responsibility away from themselves.

If we look more closely at civilian employment in the federal government, by subtracting out one major component of it, the US Postal Service, it looks like this:

The spikes every ten years in federal employment not USPS (red line) are, of course, related to the Census. What is interesting is that federal employment levels did not fall in the 1980s under Reagan who famously opined that government was the problem. They fell under the supposedly liberal Bill Clinton. You can see this as an instantiation of the "it takes a Nixon to go to China" doctrine. When the December 2007 recession hit non-USPS government employment rose, but this trend has already reversed into a gradual decline that put us back to the 1966 levels. At the same time, various cuts and attacks on the US Postal Service have resulted in sustained and continuing declines from the beginning of the recession onwards.

All this paints a picture that is the very opposite of a bloated government. The politicians may be out of control, but growth in federal government employment is not. Indeed this raises the question of how the federal government with its vastly increased budget and mandates can function with the same size work force it had nearly half a century ago.

It could be argued that increased employment at the state and local levels is the result of big government pushing more and more responsibilities on to lower levels of government. This is a weaker argument because the image of a bureaucrat in Memphis or Portland is a lot less scary than the nefarious, arrogant one residing in Washington. However, if we look at employment at the state and local level taking special note of one major component of it, education, it looks like this:

We see with a few bumps roughly linear increases in both non-education and education work forces beginning back in the 1950s. The one exception is non-educational state employment which went flat in the Clinton years. At the same time, all these sectors, with the exception of state education, have experienced declines post the December 2007 recession.

The specter of Big Government is about the use and misuse of governmental power. It is not about the size of government. The two are often conflated but, as these charts illustrate, it is a false equivalence. The paradox of Big Government is that while it is not big enough to serve our social needs, it is big enough to abuse our rights.

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Cujo359's picture
Submitted by Cujo359 on

Indeed this raises the question of how the federal government with its vastly increased budget and mandates can function with the same size work force it had nearly half a century ago.

I think the answer to that is that there are quite a few more contract workers at the federal level than there were in the 1950s. That is the basis on which I worked for the federal government for more than twenty years. Civil servants were rare in that environment. Contract employees now do much of the work of government agencies, particularly at DoD.

Submitted by Hugh on

I think you are right about contractors. There is a lot of privatization going on. In addition to DoD, there is a huge privatized intelligence complex. I was thinking too of the lack of inspectors as a lot of oversight is supposedly performed by companies themselves.