Episode Details

Episode 488
Good morning, good afternoon, or good evening, and welcome to the Paul Truesdell Podcast. It is Friday, September 26, 2025, and this is episode 488. Let’s begin with a simple request. Go get yourself a cup of coffee. Put your shoes on, lace them up, maybe get your golf cart ready. Even better, put in a pair of headsets or AirPods, step outside, and go for a walk. Do a little listening, do a little thinking, and do a little walking. Clear your head, move your body, and give your heart a bit of exercise. It is a trifecta that sets you up for sharper thinking and better conversations.
What we are about to cover is not background noise; it is the kind of thing that benefits from being digested while your body is in motion. So, treat this as a walk-and-think session. Listen closely, let the ideas bounce around while you take in the fresh air, and by the time you are back home, you will have more perspective than when you left.
Now, I will warn you. I am going to be sarcastic, because sarcasm often cuts through the fog. I am going to connect dots that at first might seem unrelated, and then I am going to explain why I do what I do here on the Paul Truesdell Podcast. The theme is always the same: governments — federal, state, county, and municipal. They are massive. They are powerful. And most of the time, people are not paying close enough attention to what they do with our money.
So today, let’s take a closer look at the beast in the room that nobody really wants to talk about. Let’s get started.

First or Phase One
When people ask me, “what percentage of the economy is the federal government,” I have to smile. Because it is one of those questions nobody asks until they realize Washington is not just the referee—it is one of the biggest players on the field.
There are two ways to measure this beast.
First, federal spending as a share of GDP. That is just a fancy way of saying, “how much of the entire U.S. economy is the government spending every single year.” Historically, in so-called normal times, Washington runs around twenty to twenty-two percent of GDP. One out of every five dollars in the economy is federal spending. That is the baseline.
But here is where it gets interesting. In times of crisis, the share spikes. During the Great Recession, spending hit twenty-four, twenty-five percent. And then came 2020. COVID hit, and the government threw money around like it was confetti at a parade. Federal spending surged to around thirty percent of GDP. Almost one-third of the entire economy ran through Washington’s fingers in a single year. And now, in 2025, projections put spending back in the twenty-three to twenty-five percent range. Translation: the crisis may have “ended,” but the appetite did not shrink. Once Washington stretches, it never snaps back.
Second, federal revenues as a share of GDP. That is the tax side. How much is actually flowing into the Treasury. This number is smaller. Usually, it hovers around sixteen to eighteen percent of GDP. So while Washington spends nearly a quarter of the economy, it only collects less than a fifth. That gap—between twenty-three to twenty-five percent out and sixteen to eighteen percent in—is not a rounding error. That is the deficit.
So let me put this in plain English. The U.S. economy is about a twenty-eight trillion-dollar machine. And every single year, the federal government spends roughly a quarter of that machine, while only collecting less than a fifth. Think about that. If you ran your household this way, you would be bankrupt before the next electric bill hit the mailbox. But in Washington, they call it “fiscal policy.”
And here is the foundation point you need to keep in mind: when one in every four dollars of the economy is coming from Washington, the government is not just a regulator or a safety net. It has become one of the largest sectors of the economy itself. That changes everything—how markets behave, how business