Authors libby rittenberg 785

purchases have ranged between 15 and 20% of GDP ever since. The
Vietnam War, the Persian Gulf War, and the wars in Afghanistan and Iraq
did not have the impact on purchases that characterized World War II or
even the Korean War. A second development, the widening gap between
expenditures and purchases, has occurred since the 1960s. This reflects
the growth of federal transfer programs, principally Social Security,
programs to help people pay for health-care costs, and aid to low-income
people. We will discuss these programs later in this chapter.
Finally, note the relationship between expenditures and receipts. When a
government’s revenues equal its expenditures for a particular period, it
has a balanced budget. A budget surplusoccurs if a government’s revenues
exceed its expenditures, while a budget deficit exists if government
expenditures exceed revenues.
Prior to 1980, revenues roughly matched expenditures for the public
sector as a whole, except during World War II. But expenditures remained
consistently higher than revenues between 1980 and 1996. The federal
government generated very large deficits during this period, deficits that
exceeded surpluses that typically occur at the state and local levels of
government. The largest increases in spending came from Social Security
and increased health-care spending at the federal level. Efforts by the
federal government to reduce and ultimately eliminate its deficit, together
with surpluses among state and local governments, put the combined
budget for the public sector in surplus beginning in 1997. As of 1999, the
Congressional Budget Office was predicting that increased federal
revenues produced by a growing economy would continue to produce
budget surpluses well into the twenty-first century.

Attributed to Libby Rittenberg and Timothy Tregarthen
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