(Originally published February 12th, 2013)
Prior to 1900 the Role of the Federal Government was primarily to Provide for the Common Defense
In 1800 the new federal government didn’t do a lot. It spent only about $11 million (in nominal dollars). With 55% going to defense. About 31% went to pay interest on the war debt. About 2% went to the postal service. And about 12% went to other stuff. Defense spending and interest on the war debt added up to about 86% of all federal outlays (see Government Spending Details).
In 1860, just before the Civil War, spending increased to $78 million (in nominal dollars). Defense spending fell to 37%. Interest spending fell to 4%. And postal service spending rose to 19%. While spending on other stuff rose to 40%. Just over 60 years from the founding the federal government had changed. It was less limited than the Founding Fathers designed it to be.
In 1900 spending increased to $628.6 million (in nominal dollars). With defense spending coming in at 53%. The postal service at 17%. Interest went up to 6.4%. And other spending fell to 24%. Again, defense spending consumed over half of all federal spending. For the role of the federal government was still primarily providing for the common defense. Running the postal service. Treating with other nations. And trading with them. As well as collecting duties and tariffs at our ports which paid for the federal government. There was a lot of graft and patronage. And long lines for government jobs. Primarily because government was still somewhat limited. With a limited number of government jobs to reward campaign contributors. But that was about to change.
The Progressives expanded the Role of the Federal Government in our Lives and made it more Motherly
The American Civil War killed about 625,000 men. With an 1860 population of 31,443,321 those deaths amounted to about 2% of the prewar population. To put that into perspective if 2% of the U.S. population died in a war today that would be approximately 6.2 million people. And to put that into perspective the total population of the state of Missouri is about 6 million people. So the American Civil War claimed a very large percentage of the population. Leaving a lot of children to grow up without a father. Which had a profound impact on the size of the federal government.
Prior to this generation American men were some of the manliest men in the world. Tough and rugged. Who could live off of the land. Completely self-sufficient. These are the men that made America. Men who fought and won our independence. Who explored and settled the frontier. Farmers who worked all day in the field. Men who dug canals by hand. And built our railroads. Men who endured hardships and never complained. Then came the Civil War generation. Sons who lost their fathers. And wives who lost their husbands, brothers, fathers and uncles. Who lost all the men in their lives in that horrible war. These women hated that war. And manly displays of aggression. For it was manly displays of aggression that led to fighting. And war. Having lost so much already they didn’t want to lose the only men they had left. Their sons. So they protected and nurtured them. Taught them to shun violence. To be kinder and softer. To be not so tough or rugged. To be less manly. And when these men grew up they went into politics and started the progressive movement.
The federal government was no longer just to provide for the common defense. To run the postal service. To treat with other nations. To trade with other nations. Run our custom houses. No. Now the federal government grew to be kinder, softer and more motherly. The progressives expanded the role of the federal government in our lives. Woodrow Wilson wanted to turn the country into a quasi monarchy. With a very strong executive branch that could rule against the wishes of Congress. The Federal Reserve (America’s central bank) came into existence during Wilson’s presidency. Which was going to end recessions forever. Then came the Great Depression. A crisis so good that FDR did not let it go to waste. FDR expanded the size of the federal government. Putting it on a path of permanent growth. And it’s been growing ever since.
They decreased Defense Spending and increased Borrowings to increase Non-Defense Spending
The federal government grew beyond its Constitutional limits. And the intent of the Founding Fathers. Just as Thomas Jefferson feared. It consolidated power just as all monarchies did. And that was Jefferson’s fear. Consolidation. Seeing the states absorbed by a leviathan federal government. Becoming the very thing the American colonists fought for independence from. So that’s where the federal government changed. In the early 20th Century. Before that it spent money mostly for defense and a postal service. Now it spends money for every social program under the sun. There is great debate now in Washington about reducing the deficit. With the Democrats blaming the deficit problems on too much defense spending. And too little taxation on the rich. But if you look at the history of federal spending since 1940 the numbers say otherwise (see Table 3.1—OUTLAYS BY SUPERFUNCTION AND FUNCTION: 1940–2017 and A History of Debt In The United States).
As defense spending (including Veterans Benefits and Services) rose during World War II non-defense spending (Education, Training, Employment, Social Services, Health, Income Security, Social Security, Energy, Natural Resources, Environment, Commerce, Housing Credit, Transportation, Community and Regional Development, International Affairs, General Science, Space, Technology, Agriculture, Administration of Justice and General Government) fell as a percentage of total federal outlays. And the federal debt rose (federal debt is in constant 2012 dollars). After the war defense spending fell to 50% while the percentage of non-defense spending rose. And the federal debt dropped slightly and remained relatively constant for about 30 years.
This tug of war between defense spending and non-defense spending is also called the guns vs. butter debate. Where those in favor of spending money on guns at the federal level are more constructionists. They want to follow the Constitution as the Founding Fathers wrote it. While those who favor spending money on butter at the federal level want to want to buy more votes by giving away free stuff.
Defense spending ramped back up for the Korean War and the Cold War during the Fifties. After the armistice ended hostilities in Korea defense spending began a long decline back to about 50% of all federal outlays. Where it flattened out and rose slightly for the Vietnam War. After America exited the Vietnam War defense spending entered a long decline where it dropped below 30% of all federal outlays. Reagan’s defense spending raised defense spending back up to 30%. After Reagan won the Cold War Clinton enjoyed the peace dividend and cut defense spending down to just below 20%. After 9/11 Bush increased defense spending just above 20% of all federal outlays where it remains today.
During this time non-defense spending was basically the mirror of defense spending. Showing that they decreased defense spending over time to increase non-defense spending. But there wasn’t enough defense spending to cut so borrowing took off during the Reagan administration. It leveled off during the Clinton administration as he enjoyed the peace dividend after the defeat of the Soviet Union in the Cold War. Non-defense spending soared over 70% of all federal outlays during the Bush administration. Requiring additional borrowings. Then President Obama increased non-defense spending so great it resulted in record deficits. Taking the federal debt to record highs.
So is defense spending the cause of our deficits? No. Defense spending as a percentage of all federal outlays is near a historical low. While non-defense spending has soared to a record high. As did our federal debt. Clearly showing that the driving force behind our deficits and debt is non-defense spending. Not defense spending. Nor is it because we’re not taxing people enough. We’re just spending too much. In about 50 years non-defense spending rose from around 22% of all federal outlays to 74%. An increase of 223%. While defense spending fell from 76% to 22%. A decline of 245%. While the federal debt rose 619%. And interest on the debt soared 24,904%. The cost of favoring butter in the guns vs. butter debate. The federal government has been gutting the main responsibility of the federal government, defense, to pay for something that didn’t enter the federal government until the 20th Century. All that non-defense spending. Which doesn’t even include the postal service today.
Tags: American Civil War, Civil War, Clinton, Cold War, debt, defense, defense spending, deficit, FDR, federal debt, federal government, federal outlays, Founding Fathers, interest, Jefferson, Korean War, manly men, motherly, non-defense spending, Postal Service, Progressive, Reagan, Vietnam War, Wilson