50 Years of Federal Spending by Category

All last night sat on the levee and moaned
Thinkin' about my baby and my happy home
--Led Zeppelin

Nice little review of the last 50 years of federal spending by select category. The elephant in the room is entitlement spending which now consumes nearly 15% of GDP compared to less than 5% in 1964.

Also noteworthy is military spending. When I ask my students what fraction of GDP is currently spent on military, they typically guess 20% or more. However, even during the Cold War and Vietnam, US military spending did not top 10% of GDP. Now it is under 5%.

The other series worth mentioning is interest expense--which has actually declined during the last couple of decades. How can that be when we're borrowing more than we ever have? It's because interest rates have been suppressed by central bank actions.

Such suppression only lasts until the Fed loses control of the bond market. When the Fed can no longer manipulate bond prices, then Treasury yields will explode higher.

And before you know it, the federal government will have money for little else than funding interest payments on our debt...