1 public finance public finance is the field of economics that studies government activities and the...
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Public Finance Public finance is the field of economics
that studies government activities and the alternative means of financing government expenditures.
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Government Governments are organizations formed to
exercise authority over the actions of persons who live together in a society and to provide and finance essential services.
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Political Institutions Political Institutions are rules and generally
accepted procedures that evolve for determining what government does and how government outlays are financed.
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Government Expenditures in the United States
Government purchases of labor land capital
Government Transfer Payments Welfare Social Security
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Growth in Government Expenditures
Table 1.1 (abbreviated)
Year GDP Federal Government
State and Local
Government
Total Government
Percentage of GDPTotal
1930 91.3 2.5 7.5 10.0 10.95
1945 223.0 84.7 8.5 93.2 41.79
1960 527.4 85.8 34.1 119.9 22.73
1975 1635.2 345.4 152.1 497.5 30.42
2002 10442.1 2073.9 1050.9 3124.8 29.93
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International ComparisonsCountry Government Current Expenditures
as a Percentage of GDP 2001
Denmark 49.1
France 48.8
Germany 45.1
United Kingdom 39.4
Japan 38.1
Canada 36.7
United States 31.9
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Figure 1.3 Total Government Expenditure as a Percentage of GDP 1929-2002
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Figure 1.4 The Distribution of Federal Expenditure, 1966-2002
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Federal Government Expenditures by Function
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State and Local Government Expenditures
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State and Local Expenditures (millions)
Combined State Local
Capital 226,783 84,765 142,017
Education 594,590 162,054 432,536
Public Welfare 279,597 239,903 39,694
Highways 115,467 71,248 44,219
Utility 138,783 20,278 118,504
Public Safety 156,779 55,682 104,442
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Federal Revenues
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State and Local Government Revenues
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State and Local Revenue (millions)Combined State Local
Intergovernmental 360,534 335,422 398,497
Taxes 904,961 535,241 369,720
Property Tax 279,111 9,702 269,409
Sales 324,039 262,360 61,679
Income Tax 202,858 185,696 17,161
Education 72,401 55,166 17,235
Utility 102,338 11,935 90,402
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Annual Budget Differential (billions)
-600
-400
-200
0
200
400
1970 1975 1980 1985 1990 1995 2000
Total On-Budget Off-Budget
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Budget Differential as % of GDP
-7.0-6.0-5.0-4.0-3.0-2.0-1.00.01.02.03.0
1970 1975 1980 1985 1990 1995 2000
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Federal Debt (trillions)
0
2
4
6
8
1970 1975 1980 1985 1990 1995 2000
Total Public Fed Gov Accts
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Federal Debt as % of GDP
0.0
20.0
40.0
60.0
80.0
1970 1975 1980 1985 1990 1995 2000
Total Public Fed Gov Accts
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Government Expenditures (% GDP)
0.0
10.0
20.0
30.0
40.0
1970 1980 1990 2000
Total Federal State and Local
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Budget Differential-State and Local (billions)
-20.0
-10.0
0.0
10.0
20.0
30.0
40.0
50.0
60.0
1970 1975 1980 1985 1990 1995 2000