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Federal Spending

No single measure can adequately capture the size or growth of government over time. Nevertheless, there are a few time-tested measures that provide a starting point for understanding the complexity of change in American intergovernmental relations. Perhaps the most basic - and therefore widely used - measure is federal spending, measured as a percentage of the gross domestic product (GDP). This measure, while imperfect, is considered to be one of the most "valid indicator[s] of the relative size of the private versus the public sector" (quoted in Higgs, 1991, p. 21).

As indicated in the data below, the federal government's "share" of GDP spending has grown consistently since the New Deal era, albeit at an irregular pace, and with brief periods of decline. Brookings scholar John Dilulio has summarized the rate of spending as follows:


"Since 1960, annual federal spending (adjusted for inflation) has increased about fivefold: it doubled between 1960 and 1975, and doubled again between 1975 and 2005."

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Federal Outlays

Employment Share

IMF Data

Power Shift



A few general observations from the data above:

  1. Spending hovered from about 8 percent in the late twenties to 10 percent during the early New Deal era.

  2. The unprecedented wartime economic mobilization of the early forties produced - with no comparison until recently - the largest governmental share in US history. At its peak in 1943-1944 government expenditures accounted for more than 40% of GDP.

  3. Between 1950 and 2019, and until the recent shock from COVID-19, that share has never risen above 25% of GDP

  4. In 2020, federal spending breached 30% of GDP, for the first time since World War II. These levels of spending are explainable, in part, to the government response to COVID-19

Further Reading: A New System "out of balance"?

Given the profound changes to the American federal system over time, many have wondered if we are seeing the creation and evolution of a new system of government in the United States. David B Walker, in The Rebirth of Federalism (2000), provides a compelling account of the ways in which today's intergovernmental system has become increasingly complicated and therefore increasingly difficult to understand and measure.


Since 1960, there have been a number of transformational shifts across different dimensions of the United States federal partnership (e.g., attitudinal, political, representational, programatic, fiscal, and institutional). According to Walker, there is no way that a return to a simple "cooperative federalism of yesteryear will ever occur, not to mention a drive back to traditional...federalism" of the pre-New Deal era.

Yet, as Walker notes, this does not mean that citizens and state leaders can simply ignore these transformational shifts. In the conclusion to his book, Walker suggests that younger generations will have to find ways to navigate an increasingly complicated, overloaded, unbalanced ("top heavy") system. As Walker sees it, we now live in an era of"conflicted federalism" - with no neat solutions or easy answers.  

As we come to grips with this new era of "conflicted federalism," what are the most important shifts to pay attention to? Walker identifies 12 "dimensions of recent change," which merit closer attention: 

  1. Increases in the use of Federal aid dollars to states

  2. Proliferation of grant programs

  3. Collapse of federal-state partnerships

  4. Shifting positions of authority between the states and Federal government

  5. Expansion of Federal programs and "national activism"

  6. Diversification of the forms of federal aid

  7. Creeping conditionalism and "galloping social regulations"

  8. Creation of new regional programs

  9. Erosion of Federal-state tax comity

  10. [Partial] Revitalization of states

  11. Centralizing tendencies of Supreme Court decisions

  12. Emergence of national party politics 

The Rebirth of Federalism (2000, 1-16)

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