Prior to the great crisis of 2007, the governments of the European Community (according to its official statistical service Eurostat) spent 47 percent of GDP, against 19 percent for the US federal government. Including state and local government spending, the US total rises to 36 percent (of which 6 percent is pensions), but the comparison is far from exact. There is quite a difference between spending that is supported by taxpayers through referenda authorizing bond issues, and tax-and-spend mandates executed through the central government. Most of the pension payments, moreover, reflect income from pools of savings paid by pensioners rather than the proceeds of taxes on current income. A fairer pre-crisis comparison would put US government spending at a little over 30 percent of GDP vs. just under half for Europe.
