The federal government was smaller—4.3 percent of GDP in 1931—and narrower. About 70 percent of the spending… — David Wessel
The federal government was smaller—4.3 percent of GDP in 1931—and narrower. About 70 percent of the spending went for three things: Defense, veterans’ benefits, and interest payments on the national debt. “The federal budget was not then, as it later became, a machine constantly generating new programs and expansions of old ones,” Herbert Stein wrote.
p. 38Source: Wikiquote · CC BY-SA 4.0
More from this book
No one really knows how much the U.S. government can borrow before global investors get uneasy and begin to demand higher interest rates. The national debt exceeded 100 percent of GDP during World War II and then came down as the economy sprinted. But history suggests debt of that level is in the danger zone. Think Argentina, circa 2001. Think Greece, circa 2012.
p. 143
Ultimately, what matters is where Congress and the president end up, not where they start. But defining the starting point and crafting the baseline are important to the politics and public perceptions of the budget—they are used by one side to magnify the size of the spending cuts or tax changes proposed by the other side—and politics and perceptions have a lot to do with what actually happens.
p. 142
“From the mid-1930s to the 1970s, the government made a set of commitments that led to expectations on the part of the American people about what their government owes them,” says Robert Reischauer, a former director of the Congressional Budget Office. “And they are totally unprepared to go back to a different world.”
p. 41
