Ezra Klein Was Right, The Federal Government Is An Insurance Company Backed By The Army

Renowned statistician Nate Silver is back, and so is his website FiveThirtyEight. One of his inaugural articles deals with government spending, with data aggregated mostly byUSGovernmentSpending.com. And there are a few eye openers, if you care to parse through the numbers. The headline numbers? 40% and 49%.

The former is the total amount of government (across Federal, state, and local governments) spending as a percentage of GDP. The second is the percentage of Federal spending that goes towards entitlement programs, the bulk of which fall under Social Security, Medicare, Medicaid, Federal unemployment benefits, and SNAP (food stamps).

These numbers aren’t too far away from our Western European counterparts, which is probably why we’ve seen European-like economic sclerosis. While it’s still too early to project when/if total government spending eclipses the all important 50% mark of GDP, some (I) would say that even 40% is too much.

If I had to pull a number out of a hat, the Federal government would spend ~15% of GDP while state and local governments kick in another 10% combined. The funny thing is, if you eliminated Social Security, Medicare, and Federal unemployment benefits, you’d reach that figure for the Federal government. Rationalization of state and local resources (mostly public education) would help get us down to ~10% for non-Federal government spending.

Ezra Klein had it right a few years ago. If you look at government spending, the Federal government is little more than a massive insurance company backed by an army. There is something fundamentally wrong with modern government when half of it deals with explicitly transferring wealth from one group of people to another.