This Cap is Too Big

Look at me
I can be
Centerfield
--John Fogerty

Interesting chart below sourced from Mary Meeker's presentation on the US fiscal situation. Meeker made a name for herself as a .com analyst at Morgan Stanley (MS) during the tech bubble days; she's now and is now at VC firm Kleiner Perkins.

The thought process behind the presentation seemed mediocre, but I did like the graph.

Yesterday we argued that the 'cap' part of the Cut, Cap, and Balance bill was not aggressive enough. Essentially, it would institutionalize federal government spending at 20% of GDP.

The graph shows that, from the country's founding until the 1930s, federal government spending remained relatively constant at about 3% of GDP. The excursions from the 3% trend were war primarily war-related.

The New Deal changed that, and federal government spending has never looked back.

Historical evidence suggests government spending in a free society can certainly be limited under 5% of total output. Legalizing a cap of 20% institutionalizes squalor.

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