If you want to make America Great Again...then you have to restore The Great Society

 

Economics Without The B.S.**: 

[**  Double entendre intended.]

The link between economic growth and progress was broken, and must be restored!

What Were LBJ's "Great Society" Programs?

How did he/we do it?  We had the greatest period of peacetime economic growth -- the 1960s -- in our history.  And it was broadbased, with the narrowest gap in income and wealth inequality.

	Real GDP	Real GDP          per Capita
1790 to 1810	4.96%	1.81%
1790 to 2024	3.77%	1.81%
1790 to 2000	3.96%	1.86%
1866 to 1896	3.96%	1.53%
1947 to 2024	3.09%	1.94%
1947 to 2000	3.52%	2.20%
1947 to 1973	3.87%	2.33%
1958 to 1973	4.11%	2.74%
1960s	4.53%	3.13%
1970 to 1980	2.92%	1.84%
1982 to 1989	3.62%	2.68%
1992 to 2000	3.84%	2.60%
2001 to 2024	2.13%	1.34%
2002 to 2024 Just the positive years, not including 2001, 2009, and 2020	2.76%	2.01%

Citation: Louis Johnston and Samuel H. Williamson, "What Was the U.S. GDP Then?" MeasuringWorth, 2025.  Downloaded May 22nd 2025.  My calculations.

If you just took the positive years of economic growth between 2001 to the present, leaving out the recessions, it would be twenty-five years of economic growth at least 1% below the historic average of our growth since 1790 and almost that bad since the post-World War II days of 1947 to 2000 – 2.8% versus 3.8% or 3.5% -- and that’s just counting the good years of the last 25 years, while leaving in all the panics of the 19^th Century and the Great Depression of the 1930s.

What if we had grown by just the average – an additional 1% per year more than we did over the last 25 years – 3.5% per year?^[1]  Where would we be today?  Our GDP today is around $30 trillion.  In 2001 our GDP was around $10.5 trillion.  Today in 2025 it would be either $40 trillion or well over $50 trillion depending on your starting point of 1790 or 1947, a $10 to $20 trillion difference.

What would be the difference in revenues collected?  Well the federal  government collects about 17% of the GDP.  So for each additional $10 trillion that would be $1.7 trillion ($3.4 trillion with a $50 trillion GDP economy); and that’s each year, and that’s without making the federal government any more efficient or changing anything, just doing what it has normally done.  It would be an additional $800 billion in revenues for all of the states for each additional $10 trillion added to the GDP (that would be $1.6 trillion with a $50 trillion GDP economy).

So think about that?  We currently have a $30 trillion economy and the President and Congress are trying to cut $1.5 trillion in programs, programs that are not waste, but help people.  This rationale would be obliviated if we just had normal/average economic growth over the last twenty-five years.  And I am just talking about doing what we did before, nothing exceptional; just being average.  And the $1.7 trillion additional revenues for each additional $10 trillion of GDP production is only the federal government’s portion.  That additional ten trillion dollars is coming from our private sector, our businesses, their activity.  That’s jobs, the additional jobs that we don’t have today.  That’s the additional consumer spending that we would be generating.  That’s the additional services our private sector would be providing.  

Now do you get it?

 

¹  The formula for compounded annual growth rate of change is used:

^{CAGR = ((Ending Value / Beginning Value)^(1 / Number of Years)) - 1} 

The GDP dollar values are for nominal GDP (e.g. $30 trillion) not the Real GDP which factors out inflation.  But the growth rates I cite (e.g. 3.5%) are the growth rates for the Real GDP.  For the CAGR formula I use the nominal GDP for the Ending Value and the Beginning Value.  These Nominal GDP growth rates are:

1790 to 1810      7.06% 1790 to 2024      5.51% 1790 to 2000      5.62% 1866 to 1896      1.70% 1947 to 2024      6.47% 1947 to 2000      7.35% 1947 to 1973      7.09% 1958 to 1973      7.15%    1960s                6.93% 1970 to 1980      9.86% 1982 to 1989      7.33% 1992 to 2000      5.83% 2001 to 2024      4.49% 2002 to 2024      5.70%  Just the positive   years not including 2001, 2009, and 2020

So the difference in the rates of growth, whether comparing them by nominal values (not adjusted for inflation) or Real GDP (adjusted for inflation), the difference is still 1%.  And you can note that the difference in Nominal GDP would be greater when the excellent growth of the 1960s is used for comparison, or the period from 1947 to 2000 – both being around 7%, and therefore a difference of 2.5% from the present period of 2001 to 2025.

 

I know this may sound mixed up for most folks.  But I did this because these are the ways you read these numbers in the news.  When they say the economy today is a $30 trillion economy they are giving you the Nominal GDP value, and not the Real GDP value of $23.5 trillion.  And when they say the economy has grown at a 3% pace, they are giving you the rate of growth of the Real GDP, in order to factor out inflationary growth.  I hope that clears it up for you.  That’s economists for today.