No matter how much the economy might contract as it free falls down the fiscal cliff, this much is true: We now have proof that the U.S. economy is totally — totally — dependent on federal government spending.
The sequestration piece of the cliff calls for spending cuts of $1.2 trillion over the next 8 years – an average of $150 billion per year.
According to the White House website, the first time the Federal government spent more than a billion dollars in a single year was in 1917 when we spent just under $2 billion having entered World War I in April of that year. The next two years of full-blown involvement saw spending of $31 billion to pay for the war.
Fifteen billion in 1917 dollars would be about $180 billion today. That’s a far, far cry from the $3.8 trillion estimated for FY 2013 in which we currently reside. In fact it’s just under five percent of this year’s budget outlays.
In 1944 and 1945 – the two highest years for spending during World War II we averaged about $92.5 billion. In today’s money that would be about $946 billion – still less than 25% of today’s outlays.