How much has the recession increased government spending?
Compared with a counterfactual in which there was no financial crisis, the answer is about two percentage points of GDP, and most of that comes from unemployment benefits, food stamps and Medicaid. Paul Krugman runs through the charts and graphs here.
One important note: The charts measure "total government spending," which means they include state and local spending. Because the financial crisis destroyed state and local revenue streams, a lot of the spending the federal government did was essentially compensatory. If the federal government spends an extra dollar and the state of California saves an extra dollar, total government spending remains unchanged.
By
Ezra Klein
| December 28, 2010; 9:47 AM ET
Categories:
Budget
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So, is your house back up to its pre-crash level? Does your neighbor have a real job?
In other words, how is that trickle down economics working for you today?
Posted by: denim39 | December 28, 2010 10:21 AM | Report abuse
Actually, for those who didn't click on Krugman's blather, its about 2 points of Krugman's different metric called 'potential' GDP.
Which is a pretty sizable amount and all given how liberals utterly hate tax cuts taht come in at 2% of 'potential' GDP.
Posted by: krazen1211 | December 28, 2010 10:33 AM | Report abuse
Actually, for those who didn't click on Krugman's blather, its about 2 points of Krugman's different metric called 'potential' GDP.
Which is a pretty sizable amount and all given how liberals utterly hate tax cuts taht come in at 2% of 'potential' GDP.
Posted by: krazen1211 | December 28, 2010 10:33 AM | Report abuse
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