The “Money Report” section of the April issue of The Atlantic Monthly contains a fascinating comparison between what Americans spent as a society in 1967 and what we spent in 2007.  The facts are sometimes in agreement with popular perception… and sometimes rather wildly at variance with them.

The area where spending has gone up the most is, unsurprisingly, that of health care, and few would dispute that.  In constant dollars, adjusted for inflation, health care costs have gone from 8.1% of spending to 18.0% – more than doubling.  Likewise, the percentage we spend on business services, things like advertising, accounting, legal services, insurance other than for health care, real estate fees, and consulting, has also more than doubled (this is also where those billions in financiers’ bonuses fit in, as well as the  additional costs of such services as tax preparation, various attorney’s fees, and all the money management fees).  Recreation and entertainment spending have also increased by 80%, so whether we want to admit it or not, we’re either pampering ourselves more than we did forty years ago or the entertainment and recreation moguls are charging more for the same things.

In some areas, such as education, housing, and transportation, there’s been little change in the proportion of income we spend.  With the high increase in the cost of higher education, that suggests that spending on primary and secondary education, in real dollar terms, has dropped, and from what I’ve seen in state and local education budgets that’s definitely been the case.

On the other hand, the percentage of our spending going to food and drink has dropped by 40%, even though proportion spent at restaurants has increased by 75%. And the percentage we spend on clothing has dropped by more than 35%, no surprise to me, given the way most people look in public.

But, most surprising to me were the numbers spent on government/taxes.  In 1967, over 18% of income went to government through fees and taxes.  By 2007, that had dropped to 13.2% – a decrease of over 25%.  So… in real dollar terms, government is costing us less of our income today than it did forty years ago.  Somehow… this message hasn’t gotten across to anyone.

Admittedly, most people just look at the dollars, and in nominal dollars, the figures show that government budgets increase every year, but over time, those budgets haven’t increased as much as inflation.  Of course, neither have the earnings of the middle class, but even their earnings have only declined, in real dollars, very slightly – not the 25% real decrease we’ve seen in government spending. Is it any wonder we’re facing a crumbling infrastructure in areas such as highways and bridges, especially when a larger fraction of declining real federal revenues has been devoted to fighting overseas wars?

Of course, I doubt that these numbers, or anything resembling them, will ever show up in the political arena. But I thought some of you ought to know.