How Big is Our Government?

A few years ago I began examining the percent of the economy that was owned or controlled or influenced by the government. It turns out this is a very difficult statistic to derive. Much of government activity is off budget and effects are like Bastiat’s broken window – the true effects are unseen. Nevertheless, there were some rough estimates that could be made. Everything seems to point to somewhere between 30 and 40 percent being run or controlled by the government with about 100 percent influenced by the government. Here are some data collected from academic studies, think tanks, and government agencies.

All told, industries and sectors representing more than a third of the U.S. economy are being reshaped by government (http://hbr.harvardbusiness.org/2009/07/government-in-your-business/ar/1)

General measures such as government spending as a percent of GDP, tax revenues as a percent of GDP and Government Debt as a percent of GDP lie between 30 and 40%. Right now all US governments together are spending about 45% of GDP. As recently as 1948 – shortly after WWII – total government spending in the US amounted to about 23% of GDP. Since 1970, federal spending has risen 7 times faster than median income.

Government employment as a percent of total employment is about 21%. Yet, a recent study by the Heritage Foundation estimates that around a quarter of a million new federal government workers will be needed just to spend the massive new budget.

While state and local governments employ over 20 million people already, the federal government has become the largest single employer in the country with almost three million employees (not including contractors and military personnel). For comparison, after the New Deal from 1933 to 1939 there were about 700,000.

The Bureau of Labor Statistics reports that in 2008 there were over 150,000 jobs added in government at all levels, while the private sector lost close to four million. Almost 100,000 people were hired by the federal government in fiscal year 2007, according to the Office of Personnel Management.

Several other fields dominated by government are forecasted to expand, even in the midst of an economic downturn. Expect companies like that deal in carbon credits and related fields to expand even more. While not directly employed by the government, many of these “environmental” workers depend on government regulations for business. Moreover, the $787 billion American Recovery and Reinvestment Act provides billions of dollars for “green” projects, as well as for other sectors of the economy such as education.

The total staffing of regulatory agencies went up nearly as much, from 172,000 employees to over 244,000— a 41 percent increase.

Regulation
The federal government alone enforces thousands of pages of regulations that impose a burden of some $1.1 trillion—an amount that is comparable to total federal income tax receipts. Since 2001, the federal government has imposed almost $30 billion in new regulatory costs on Americans. About $11 billion was imposed in fiscal year (FY) 2007 alone.
Over 50 agencies ranging from the Animal and Plant Health Inspection Service to the Bureau of Customs and Border Protection have a hand in federal regulatory policy.

Appropriations for federal regulatory agencies have increased from $27 billion in FY 2001 to $44.9 billion in FY 2007—a 44 percent increase in inflation-adjusted dollars.[12] The total staffing of regulatory agencies went up nearly as much, from 172,000 employees to over 244,000— a 41 percent increase.

Estimates by several researchers on the total cost to the private sector of federal regulation of the private sector found it to be about $850 billion in 2000 . The federal government’s Small Business Administration found that complying with federal regulations costs companies $1.1 trillion a year. That’s about 10 percent of the whole U.S. economy.

For large firms, the regulatory burden comes to about $5,300 per employee. But for small businesses with fewer than 20 workers, the cost is closer to $7,600 per employee – just about equal to the cost of providing a family with health coverage.

The federal government owns or runs several businesses. These GSEs and other organizations include:
· Ginnie Mae
· National Mortgage Association and the Freddie Mac.
· The Federal Home Loan Banks
· Agricultural Credit Bank
· Farm Credit Banks
· Federal Agricultural Mortgage Corporation,
· National Flood Insurance Program (NFIP)
· Postal Services.
· Air Traffic Control.
In addition, the government owns nearly all Highways, Airports and
Seaports.

The federal government owns almost 700 million acres of land - roughly a million square miles. That's four times the area of California and New York combined, and one-third of the entire country. This federal footprint is heavily concentrated in the West. Uncle Sam owns 85 percent of Nevada, 70 percent of Alaska and nearly half of California.