Comparing Government Spending Over Time

Abstract

The calculation of relative values is especially challenging in assessing the costs of the federal government across time. Specifically, the challenge of determining relative values of government spending is based on two related issues. First, the government spends money on many different things. The government compensates employees, administers programs, sends money to states and local governments, reimburses doctors and hospitals for medical expenses, provides direct loans and loan guarantees, distributes cash assistance, subsidizes farmers, and maintains a military in addition to many other activities. Second, government expenditures evolve over time based on the political and economic environment. This paper examines the considerations of three different ways in which analysts tend to compare relative values at different points in time.