Is the federal government trying to take over the American economy?

“For a long time, the United States had one economy,” columnist Daniel Henninger wrote recently in the Wall Street Journal. “Now we have two economies that compete for America’s wealth — a private economy and a public economy.”

The two major parties have sharply differing views about how much the government should be involved in the economy. But the notion that government is anywhere nearly large enough to compete with the private sector is a myth.

Agreeing with Henninger, many Republicans believe that the government is already overly involved in matters best left to business. They fear that the federal government is gradually expanding to take the place of corporations and small businesses as the supplier of goods and services to the public.

They argue that the government ought to get out of the way and let the private sector invest with as few restrictions as possible.

To counteract the trend toward supposedly bigger government, public spending should be cut, which could lead to further tax reductions, their argument goes. Most tax cuts should go to wealthier individuals who are seen to be the key investors in economic growth.

Republican Rep. Paul Ryan of Wisconsin has laid out a budget that would do just that, and it has been endorsed by House Republicans and Mitt Romney, who will be the GOP presidential nominee. It calls for sharp spending cuts and new tax breaks for the wealthy.

Ryan’s bold proposal got him on the list of vice presidential possibilities.

Democrats say that the government can have a big effect on getting the economy back on its feet by spending that promotes economic development. They would reduce spending, though they want to raise taxes on the wealthiest people.

Whichever approach is favored by voters this November, right now government plays only a small role in the economy, compared with the private sector.

In 2011, the total of all spending for goods and services in the United States was about $15 trillion. That level of spending is what gave the United States the rank of the world’s largest economy. China was a distant second.

Of that amount, $12 trillion was spent or invested by private individuals and companies. That’s one of the two economies that Henninger was writing about.

That left $3 trillion for all levels of government spending — federal, state and local. The federal share was $1.2 trillion.

In short, federal government spending is only 10 percent of private spending.

If we dig a little bit deeper into the federal accounts, we find that two-thirds of federal outlays go for national defense. Republicans say they do not want to cut that spending, reserving the budget ax for what’s left.

The remaining $400 billion covers everything the federal government does outside of defense — Social Security, Medicare, roads, air traffic control, education, scientific research and debt service.

Seen in terms of the “two economies,” this non-military government spending is a little more than 3 percent of the private sector. In other words, the federal spending that stands to be cut is a tiny fraction of spending by the “private economy.”

The amount spent by the private sector, including consumer purchases, hardly faces much competition from the federal government. Private spending, not the government, determines the shape of the national economy.

The problem is that political rhetoric about government’s role obscures just how little influence it has. And that role is shrinking.

Last year, the American economy grew slowly. It was pushed by increased spending by the private sector and a big increase in private investment. At the same time, government spending at all levels fell by almost 3 percent.

All economic growth came from the private sector. Government spending backed down, mainly because a struggling economy produced less tax revenues.

What about the Democrats and increased government spending to stimulate the economy?

President Barack Obama and congressional Democrats, recognize that the federal debt — $15.6 trillion at the end of last year — must be cut. To do that, they also support reduced spending.

But to allow for some government purchases to stimulate the economy and spur employment, they also want tax increases on people with taxable incomes of more than $250,000.

In the Democrats’ proposals, spending cuts for debt reduction are much larger than tax increases on the wealthy.

The political battle is not really about blocking or allowing a massive growth in government. But the incorrect belief that government is seeking to push the private sector aside makes it all the more difficult to find the proper balance.