Government Spending Across the World

How the United States Compares
November 5, 2019

download the brief

Key Findings

The United States ranks twenty-fourth in government spending as a share of GDP out of twenty-nine countries for which recent comparable data are available.

The key determinant of where countries rank in overall government spending is the amount spent on social protection. The United States ranks last in spending on social protection as a share of GDP and twenty-second in per capita spending.

The United States ranks at or near the top in military, health care, education, and law enforcement spending.

Measuring government spending by different methods and including tax expenditures does not appear to significantly alter the analysis of United States spending compared to other countries.

Introduction and Summary

Comparisons of how much the governments of different countries spend, and on what, can illuminate the range of fiscal policy options available and provide insight into which approaches work best. They also can tell us what different countries value.

Levels of spending vary greatly across the world. In France the spending of all levels of government accounts for more than half (56.4 percent) of the economy, as measured by gross domestic product (GDP). At the other end of the spectrum is Colombia, where government spending is less than a third (31.9 percent) of GDP. At 38.0 percent, the federal, state, and local governments of the United States rank twenty-fourth among the twenty-nine countries for which recent comparable data are available.

Where countries rank in government spending is mostly driven by how much they spend on “social protection,” a category that includes most non-health-care social safety net and social insurance programs (for definitions of spending categories, see Appendix A, “OECD Spending Categories”). Countries that are high spending overall spend a lot on social protection, while countries that are low spending overall spend less. The United States ranks last in social protection spending.

Spending as a share of the economy is, however, just one way of measuring the differences between countries. While it is a good measure of how much countries spend relative to their available financial resources, it is not necessarily a good measure for comparison of the level of service provided by governments. A better measure for that is spending per capita—the amount spent per person. By that measure, the United States ranks closer to the middle overall, though low compared to other wealthy countries and twenty-second in social protection.

By either measure, the United States ranks near the top in military, health care, education, and law enforcement spending. Its military spending is equal to the combined military expenditures of the next seven highest-spending countries combined.

The choices the United States and other countries make regarding how they spend their resources are influenced by many factors. There is no single right choice. The decisions governments make reflect different values and priorities which lead them to different conclusions as to the best way to reach their goals and face their distinctive challenges. Some countries value projecting military power throughout the world. Others see military spending as a diversion of resources from more constructive uses that benefit their society and residents. Some countries see universal access to college education as of broad value, while others do not believe one person’s tax dollars should pay for another person’s college education. Some countries invest heavily in preserving their culture’s arts and letters; others are less interested. Some countries see alleviating poverty as a moral imperative; others see spending on the poor as rewarding failure and breeding dependency. The list of choices is almost endless.

The reasons countries make the decisions they make are as varied as the countries themselves, but one common factor is attitudes toward taxation. In the long run, the overall level of spending, with the consequential impact on each category of spending, is related to the level of taxes. Some countries believe that lower taxes are the path to economic success, or they question the morality of taking money from their citizenry, and thus tax and spend relatively little. Other countries believe that public investments in such things as infrastructure and education are the key to economic vitality, and that public spending is the path to a more just, fair, and safe nation. For those countries, drawing taxes from private hands for a greater good is warranted.

Continue reading

 

About the Authors

Michael Ettlinger is the founding director of the Carsey School of Public Policy.

Jordan Hensley is a policy analyst at the Carsey School of Public Policy.

Julia Vieira is a Master in Public Policy student at the Carsey  School of Public Policy.

 

Acknowledgments

This paper is an evolution of a previous work, “Comparing Public Spending and Priorities Across OECD Countries,” by Sabina Dewan and Michael Ettlinger (Washington DC: Center for American Progress, 2009), https://www.americanprogress.org/issues/economy/reports/2009/10/02/6746/comparing-public-spending-and-priorities-across-oecd-countries/. The authors would like to thank that report’s co-author, Sabina Dewan, for her contribution to the analytic framework of this brief.

Topics