Continued from here:
Right, in Part II we surveyed US government spending. While spending spiked to 23.7% of GDP in 2010 (the highest since 1946) due to the financial crisis, it otherwise gradually declined over the past few decades to about 19% of GDP in the early 2000s. The decline appears primarily due to decreased defense spending.
We also noted that total US government spending’s among the lowest in the developed world. Despite this, the accompanying decline in tax revenues over the decades now leaves us in a situation where spending’s at 160% of revenues in 2010. What does that mean in terms of the government’s budget deficit and, of course, debt?