Figure 2.6

Government expenditures as a proportion of gross national product, federal and state and local governments, 1890-1990 (percentage).

Source: U.S. Bureau of the Census (1975, 1996).

On this dimension, America is very different today. To demonstrate this difference, Figure 2.6 presents government expenditures as a fraction of gross national product (GNP) for federal, state, and local units.19 During the last decades of the nineteenth century and the first few decades of the twentieth, the relative size of governments was low and stable. Expenditures at the federal level were only 3 percent of GNP and those at all levels accounted for less than 10 percent. Any assessment of the fiscal effects of these earlier waves of immigration, whether positive or negative, must be considerably less important in an overall evaluation of immigration. Figure 2.6 shows how different our world has become. Starting with the initiatives of the New Deal, government spending at all levels expanded rapidly, with little sign of abatement. By 1993, the federal government allocated about one-quarter of the gross domestic product (GDP), and state and local governments nearly one-fifth. Combined, the share of government spending in the country's economy has expanded four-fold from the time of the immigrant waves at the beginning of this century.

Nor it is only the level of government that has changed. Figure 2.7 divides the federal government spending into four categories: national defense, interest on the public debt, veterans benefits (largely veterans of the Civil War in the early periods), and other government expenditures. The principal historical trend


A portion of the federal budget consists of outlays to state and local governments. There is some double counting in Figure 2.6, but it is a relatively small amount and does not significantly alter these trends.

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