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State and local spending, 1960–2013

The graph shows total state and local spending (as a percentage of GDP) was around 10% in 1960, and over 14% in 2013. Education spending at the state and local levels has risen minimally since 1960 when it was under 4% to more recently when it was closer to 4.5% in 2013.
Spending by state and local government increased from about 10% of GDP in the early 1960s to 14–16% by the mid-1970s. It has remained at roughly that level since. The single biggest spending item is education, including both K–12 spending and support for public colleges and universities, which has been about 4–5% of GDP in recent decades. Source: (Source: Bureau of Economic Analysis.)

U.S. presidential candidates often run for office pledging to improve the public schools or to get tough on crime. However, in the U.S. system of government, these tasks are primarily the responsibilities of state and local governments. Indeed, in fiscal year 2014 state and local governments spent about $840 billion per year on education (including K–12 and college and university education), compared to only $100 billion by the federal government, according to usgovernmentspending.com. In other words, about 90 cents of every dollar spent on education happens at the state and local level. A politician who really wants hands-on responsibility for reforming education or reducing crime might do better to run for mayor of a large city or for state governor rather than for president of the United States.

Key concepts and summary

Fiscal policy is the set of policies that relate to federal government spending, taxation, and borrowing. In recent decades, the level of federal government spending and taxes, expressed as a share of GDP, has not changed much, typically fluctuating between about 18% to 22% of GDP. However, the level of state spending and taxes, as a share of GDP, has risen from about 12–13% to about 20% of GDP over the last four decades. The four main areas of federal spending are national defense, Social Security, healthcare, and interest payments, which together account for about 70% of all federal spending. When a government spends more than it collects in taxes, it is said to have a budget deficit. When a government collects more in taxes than it spends, it is said to have a budget surplus. If government spending and taxes are equal, it is said to have a balanced budget. The sum of all past deficits and surpluses make up the government debt.


A government starts off with a total debt of $3.5 billion. In year one, the government runs a deficit of $400 million. In year two, the government runs a deficit of $1 billion. In year three, the government runs a surplus of $200 million. What is the total debt of the government at the end of year three?

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Kramer, Mattea, et. al. A People's Guide to the Federal Budget. National Priorities Project. Northampton: Interlink Books, 2012.

Kurtzleben, Danielle. “10 States With The Largest Budget Shortfalls.” U.S. News&World Report . Januray 14, 2011. http://www.usnews.com/news/articles/2011/01/14/10-states-with-the-largest-budget-shortfalls.

Miller, Rich, and William Selway. “U.S. Cities and States Start Spending Again.” BloombergBusinessweek , January 10, 2013. http://www.businessweek.com/articles/2013-01-10/u-dot-s-dot-cities-and-states-start-spending-again.

Weisman, Jonathan. “After Year of Working Around Federal Cuts, Agencies Face Fewer Options.” The New York Times , October 26, 2013. http://www.nytimes.com/2013/10/27/us/politics/after-year-of-working-around-federal-cuts-agencies-face-fewer-options.html?_r=0.

Chantrill, Christopher. USGovernmentSpending.com. “Government Spending Details: United States Federal State and Local Government Spending, Fiscal Year 2013.” http://www.usgovernmentspending.com/year_spending_2013USbn_15bs2n_20.

Questions & Answers

what is international trade
BOBO Reply
other things remain constant.
Esale Reply
explain scarcity
Richard Reply
scarcity occurs when there are not enough resources to satisfy human's needs and wants therefore we need to allocate our resources using the price mechanism.
scarcity is when there is inadequate resources to catch the unlimited wants which would compel individual to make choice.
scarcity simply means when there's a shortages of resources to satisfy Hunan's need and wants in a particular time, which means the demand for it at the moment is higher than the supply
scarcity simply means when there's a shortages of resources to satisfy humans need and wants in a particular time, which means the demand for it at the moment is higher than it supply.
That escalated real quick😂
scarcity is sometimes considered as the basic problems of economics resources r scarce because we live in a world of humans in which wants are infinite but the land labor and capital r required to satisfy those wants are limited
joint or complementary demand
Ryt Reply
what is demand
Qudus Reply
it maybe define as the amount or quantity of goods and services which a consumer is willing to buy with the ability to pay at a given price at a particular time
yesoo thanks dear
why is economics a science
Isaac Reply
Because science is all about thinking by making models whether a computational or Mathematical. Economics is a social sciences because it effects society but to understand Economics we use maths so it is a Science
I hope.......Economic is social science because it makes new new currency of money,it is decided the country’s depend system and the system be repeated others benefits in our ...
so what is the disadvantages of mix economic system
Economics is regarded as a social science because it uses scientific methods to build theories that can help explain the behaviour of individuals, groups and organisations.
The question is: why is Economic a "science" and not why is economics a "social science?" Alright folks?
In my own understanding of why economics is a science it bcz it deals mainly on human resources just like biology that deals in the human body why economics is science it also deals on the management of human resources all over the world bcz without economics there will be no human resources
what is technology
my response to the earlier question is, economics is a science but not a pure science like biology, chemistry and physics. The reason is that those pure science study inanimate object while economics study human being, their experiment are predictable.
Economics is a social science subject that shows the relationship between ends and scarce means with their alternative uses
what is Equilibrium?
Fatima Reply
it means equal price and equal quality
thank u Arthur!
Equilibrium is a state of balance in an economy. In as far as market forces are reasonably concerned, equilibrium means the state at which the quantity of goods supplied is equal to the quantity of goods demanded.
what is labour
labor can be define as a both physical and mental effort of man put forward towards production
name the types of demand and explain any two
Joint demand Composite demand Competitive demand
Labourcan be defined as man mental and physical exertion
equilibrium is a state of balance especially between opposing forces or influences
what is elasticity
Motseoa Reply
difference between demand and supply
Adeyemi Reply
Demand- It is the desire of a buyer and his ability to pay for a particular commodity at a specific price. Supply- It is quantity of a commodity which is made available by the producers to its consumers at certain price.
yes OK thank you dear
Demand can be defined as the ability a buyer is willing and able to pay at a specific price and in agiven period of time Supply can be defined as the ability the producer is willing to supply with a specific price
what is labor force
demand represents the consumer while supply represents the firm
restriction on international trade
Ayim Reply
formula for price elasticity of demand
Lognyuu Reply
what is average cost advantage and absolute cost advantage
Tamo Reply
cost advantage is an advantage that the firm has over competitors in terms of costs absolute advantage is d ability of an individual company, region,or country to produce a greater quantity of a good of service with the same quantity of inputs per unit per time
what is ceteris paribus
other things remain constant.
can you explain in more details about ceteris paribus?
what is demand
Home Reply
demand can be defined as the quantity of a commodity which people are willing to buy at particular times and at a given price .
you are talking about campaney in my self ihave campaney why don't you calculated my business
Adow Reply
formula for price elasticity of demand
Emilia Reply
Suppose that a soft drink company calculates that the demand for a bottle of its soda increases from 100 to 110 after the price is cut from $2 to $1.50.
The price elasticity of demand is calculated as the percentage change in quantity demanded (110 - 100 / 100 = 10%) divided by a percentage change in price ($2 - $1.50 / $2).

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