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URL:  http://boards.fool.com/that-said-nobody-has-responded-to-the-185-30685931.aspx

Subject:  Re: smaller government, DrB? Date:  5/15/2013  5:20 PM
Author:  sonofed Number:  423041 of 443181

That said, nobody has responded to the 185% growth in Fed spending while population has only grown 20% (and defense spending was a larger proportion back in 1990).

I'll take a shot:

Cumulative inflation from 1990 to 2013 is 80.75%, so the $1,150 in FY90 expense is more like $1,997T in 2013 dollars.

Actual US population rose from 249.6M in 1990 to 315.8M this year. That's growth of 26.5%, not 20%.

That makes the equivalent budget adjusted for both inflation and population growth $2.526T.

Okay, so we're still a long way from $3.73T. What makes up the difference?

Well, baby boomers are starting to retire. That's one factor. Social security in 1990 was $263.1B. Adjusting for inflation, that would be $475.6B in 2013 dollars. The actual social security line in the 2012 budget was $805B. That's $330B extra thanks to a huge bubble of people starting to get older.

If you add the $330B to the inflation+population adjusted total from above, you get $2.856T in adjusted total federal expense.

But real defense spending has grown as well. We spent $350.2B on defense in 1990. Adjusting for inflation, the equivalent defense spending in 2013 would be $632.9B. We actually spent $925.2B in 2013 so that's an extra expenditure of $292.3B.

Add that to our total and we're up to $3.148T in 2013 equivalent expenditure way back in 1990.

The other big area is healthcare. Again, we have a larger population of older people than we had in 1990 and we all know how fast healthcare expenses have grown over the last 20 years.

Medicare was $94.9B in 1990. Adjusting for inflation, that would give you $171.5B. Actual 2013 medicare spending came in at $492.3B. That tacks $320.8B onto the adjusted 1990 total budget bringing it to $3.468T.

It cost a lot more to take care of poor people as well, and there were unfortunately more of those in 2013 than 1990 as well. Total Medicaid expenses in inflation adjusted 1990 dollars came to $76.6B. Total 2013 Medicaid expenditures came in at $333B for a net addition to the 1990 equivalent federal budget of $256.4B and bringing the new total to $3.724T.

We saved about $64B/yr equivalent on interest payments on the debt despite huge debt increases because interest rates tanked. That was offset by our spending $40B more annually (inflation adjusted) on police, judges, and prisons and $10B more on air safety.

$3.724 in equivalent 1990 spending is close enough to $3.73T I think. So what makes up the difference between 1990 and today? The usual culprits - the cost of supporting an aging population, skyrocketing medical costs, and an overzealous commitment to military expenditure.

Steve
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