Government and Fiscal Policy

Key Takeaways

• Over the last 50 years, government purchases fell from about 20% of U.S. GDP to below 20%, but have been rising over the last decade.
• Transfer payment spending has risen sharply, both in absolute terms and as a percentage of real GDP since 1960.
• The bulk of federal revenues comes from income and payroll taxes. State and local revenues consist primarily of sales and property taxes.
• The government budget balance is the difference between government revenues and government expenditures.
• The national debt is the sum of all past federal deficits minus any surpluses.