How Big the Government?

Big government again? Critics of President Clinton's budget for fiscal 1999 worry that the new, balanced ledger is allowing a return of big spending.

But statistically that isn't so.

Even with the long list of program expansions in the budget, the federal government's share of the entire economy will shrink.

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Federal outlays amounted in 1990 to 22 percent of gross domestic product (GDP) - the nation's total output of goods and services. The new budget puts Washington's share at 20 percent. By 2002, it should be 18.8 percent. That will be the lowest level since 1974. A comparison with GDP is as good a measure as any of the size and influence of the federal government.

The strictures of the 1997 budget agreement between Clinton and congressional Republicans, plus continued economic growth, were responsible for this decline relative to GDP.

On the revenue side of the ledger, federal income (including projected tobacco settlement money) will have grown from 18.2 percent of GDP in 1990 to a peak of 20.1 percent in 1999. But that is projected to decline to 19.7 percent in 2002. All this adds up in fiscal 1999 to a tiny $9.5 billion surplus - the first in 30 years.

Actually, we suspect there will be a bigger 1999 surplus. Looking back 12 months, the budget already has been in surplus for the last two months. And, with high stock market turnover, many investors will be sharing capital gains with Uncle Sam.

Congress should, of course, review the merits of each Clinton proposal.

It must especially look carefully at plans for the expansion of Medicare to include self-funded participation by people age 55-64. Medical costs have started to escalate again after a period of leveling off. And that could be a budget buster in future.

In forthcoming political debates, there will be many legitimate discussions on the role of government. But a changed public mood, a Republican Congress, and a "New Democrat" in the White House have begun to turn downward the percentage of national output taken to run the government.

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