Terry Jeffrey

Up until the 1930s, the United States maintained a small federal government that mostly focused on the limited number of things the Constitution authorized it to do.

Americans were responsible for their own food, clothing and shelter, and if they could not take care of themselves, they looked to their extended family, their neighbors, their churches and local governments to give them a helping hand.

Charity in America in those days did not mean the federal government compelling you to hand over some of your property to the state so the state could hand it over to someone else.

Americans did not believe in spreading the wealth -- they believed in earning it. The term compassionate conservative had not been coined.

There was no federal welfare state before the 1930s.

That year, according to historical data published by the White House Office of Management and Budget, the entire federal government spent only 3.4 percent of gross domestic product. Because federal tax receipts equaled to 4.2 percent of GDP in 1930, there was a federal budget surplus equal to 0.8 percent of GDP.

Within a decade, things changed dramatically. In 1940, Franklin Delano Roosevelt -- founder of the modern American welfare state -- was preparing to break George Washington's self-imposed limit of two presidential terms.

Although the nation was still at peace, the federal government had grown almost threefold -- when measured as a percentage of GDP -- from what it had been in 1930. Federal spending in 1940 was 9.8 percent of GDP. Federal tax receipts were 6.8 percent. The Treasury borrowed 3 percent of GDP to make up the difference.

In fiscal year 2009, according to OMB's estimates, the federal government will spend 20.7 percent of GDP while taking in 18 percent of GDP in taxes. The Treasury will borrow 2.7 percent of GDP, much of it from foreign creditors, to make up the difference.

And that does not count the $700 billion the Treasury will borrow to fund the financial industry bailout.

Today, the federal government eats up more than twice as much of our national wealth as it did in 1940 and more than six times as much as it did in 1930.

What did Americans get for this massive increase in government? More of their life is now mortgaged to the government, and they are now more dependent on government.

Most of the growth in federal spending has come in the sector that the OMB calls "human resources." As currently budgeted, this includes federal spending on education, training, social services, health programs, veterans benefits and services, income security programs, Medicare and Social Security.


Terry Jeffrey

Terence P. Jeffrey is the editor-in-chief of CNSNews

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