A Small Government? US Federal Budget as a Proportion of the Economy
The United States runs the largest federal budget in the world in absolute dollars, yet—relative to the size of its economy—it is small by rich-country standards. Around 2005, Washington spent roughly one-fifth of GDP (about 20%), while large European governments typically spent closer to half. The United Kingdom hovered in the low-40s as a share of GDP; France was a bit above 50%. By this yardstick the U.S. looks less like continental Europe and more like Canada or even some middle-income countries: India, for instance, also spent roughly one-fifth of GDP at the time.
Per person, the contrast widens. Major Western European economies were allocating on the order of $15–19k per resident annually, with resource-rich outliers like Norway well above that. The U.S. sat nearer $8k per person—substantially lower than many peers despite its outsized aggregate budget. Petro-economies generally landed between Europe and the developing world on both ratios and per-capita spending, although Nigeria was a notable low-spending exception.
Two cautions help interpret the comparison. First, focusing on federal outlays understates total public spending in federations. In the U.S., adding state and local budgets lifts the total to roughly a quarter of GDP in this period—still below much of Europe, but higher than the federal number alone suggests. Importantly, federal and subnational spending aren’t substitutes; across federations, they tend to move together rather than offset.
Second, composition matters as much as size. The U.S. directed about one-fifth of its federal budget to defense—roughly 4% of GDP. That is enormous in global dollar terms yet modest as a share of the overall economy. Where governments spend (pensions vs. health vs. defense vs. investment) changes lived experience far more than a single “spend/GDP” ratio can show.
Developed countries pool:
|
Country |
GDP (in trillions, 2005 estimate, unless mentioned otherwise) |
Budgetary Expenditure (in trillions, 2005 est. unless mentioned otherwise) |
The proportion of budget/GDP |
Population |
Budget expenditure per |
|
Germany |
$2.73 |
$1.362 |
.498 |
82.4 |
16.529 |
|
France |
$2.055 |
$1.144 |
.556 |
60.6 |
18.877 |
|
UK |
$2.228 |
$.951 |
.426 |
60.4 |
15.74 |
|
Italy |
$1.71 |
$.8615 |
.503 |
58.1 |
14.827 |
|
Norway |
$246.9 billion |
$131.3 billion |
.531 |
4.5 |
29.177 |
|
Switzerland |
$367 billion |
$143.6 billion |
.391 |
7.48 |
19.197 |
| Asia Pacific |
|
|
|||
|
Japan |
$4.664 |
$1.775 |
.380 |
127.4 |
13.932 |
|
Australia |
$612.8 billion |
$240.2 billion |
.391 |
20.09 |
11.95 |
| Developed North American economies |
|
|
|||
|
USA |
$12.49 trillion |
$2.466 trillion |
.197 |
295.7 |
8.3395 |
|
Canada |
$1.035 |
$152.6 billion(est. 2004) |
.147 |
33.09 |
4.611 |
Developing country pool:
|
Country |
GDP (2005 est.) |
Budgetary Expenditure (2005 est.) |
The proportion of budget/GDP |
Population |
Budget expenditure per |
|
India |
$720 billion |
$135 billion |
.1875 |
1,095 |
123 |
|
Pakistan |
$89.55 billion |
$20.07 billion |
.223 |
162 |
124 |
|
Indonesia |
$270 billion |
$57.7 billion |
.213 |
245 |
235 |
|
Brazil |
$619.7 billion |
$172.4 billion |
.278 |
186 |
927 |
|
China |
$2.225 trillion |
$424.3 billion |
.190 |
1,306 |
325 |
|
Chile |
$115.6 billion |
$24.75 billion |
.214 |
16 |
1546 |
| Petro-economies |
|
|
|||
|
Iran |
$181.2 billion |
$60.4 billion |
.333 |
68 |
888 |
|
Saudi Arabia |
$264 billion |
$89.65 |
.339 |
27 |
3320 |
|
Venezuela |
$106.1 billion |
$41.27 billion |
.388 |
25.375 |
1626 |
|
Nigeria |
$77.33 billion |
$13.54 billion |
.175 |
128 |
105 |
All figures from CIA World Fact Book which can be accessed at https://www.cia.gov/redirects/factbookredirect.html