American Government Finance in the Long Run: 1790 to 1990

Abstract

Since Americans won their independence from Great Britain, they have engaged in an ongoing debate over the size of their governments, what taxes should be raised to support them, what services those governments should provide, how much debt governments should issue, and which of the three major levels of governments-federal, state, or local-should do the taxing, spending, or borrowing. It is in the nature of the constitutional structure of American government that these debates should be continuous, and that our governments respond to changing circumstances by changing their policies, whether incrementally or dramatically. At the end of the 20th century, American governments have come to an uneasy equilibrium where somewhat more than a third of all economic activity passes through the public sector, the national government collects slightly more than half of all government revenues, and state and local governments undertake slightly more than half of all government expenditures.1 But it was not always so.Between 1790 and 1990 the United States passed through three distinct systems of government finance. In each system, one type of revenue was relatively 1 Naturally, these numbers are approximate and change from year to year. In 1992, for example, the national government collected $1,259 billion in revenues, 55 percent of all government revenues. The national government transferred $179 billion, or 14 percent, of its revenues to state and local governments.

How Policymakers Should Deal with the Delayed Benefits of Early Childhood Programs

“…However, this large-scale borrowing led to eight states defaulting on their debts during the economic downturn of the 1840s. Subsequent state constitutional amendments put significant limitations on state debt issuance and investment in corporations (Wallis 2000).…”

Political Centralization and Government Accountability *

“…The New Deal, by introducing federal oversight of welfare spending, eradicated the patronage and political manipulation that had hitherto characterized relief programs managed at the state and local level (Wallis 2000a, b; Wallis, Fishback, and Kantor 2006). International evidence highlights similar instances of a positive impact of political centralization on government accountability.…”

Paying for the liberal state: the rise of public finance in nineteenth-century Europe

“…(2002) and O'Brien (2008). For the more recent periods, see Webber and Wildavsky (1986), Dincecco (2009a and2009b) and, for the United States, Wallis (2000). 5 Teichova and Matis (Eds.)…”