Tuesday, June 5, 2012

Federal Spending on Entitlements Has Grown Dramatically

Report Puts Debt at 70% of GDP contains some eye opening comparisons about 1975 and today.

It says this:

"The Congressional Budget Office on Tuesday projected that U.S. federal debt will reach about 70% of economic output by the end of fiscal 2012, the highest since shortly after World War II, but will gradually shrink if Congress allows tax cuts to lapse and sticks with plans to reduce spending.

The outlook gives both Democrats and Republicans debating points as they face the twin problems of rising debt and the expiration of Bush-era tax cuts. Republicans want to extend the 2001 and 2003 tax cuts and shrink government programs. Democrats say it would be more fair to combine spending cuts with higher taxes on the wealthy.

Debt has increased partly because of a drop in tax revenue and increased spending on benefit programs in response to the effects of the 2007-2009 recession, the CBO said. Federal budget analysts also said rising debt levels are the result of an imbalance between tax revenue and spending that preceded the recession. Debt was 40% of gross domestic product at the end of 2008.

Federal budget analysts sounded warnings about demands that the aging U.S. population will put on the U.S. budget. Spending on Social Security, Medicare and Medicaid accounted for 46% of federal spending over the past 10 years, not including interest payments, the CBO said. That is up from 27% in 1975.

Summing Up

Debt as a percentage of GDP will have grown from 40% to 70% in the past four short years. And it's headed higher as the economy continues to suffer slow growth and high unemployment.

Perhaps even more critical to a proper understanding of what we've done to ourselves, spending on Social Security, Medicare and Medicaid has accounted for 46% of total federal spending the past ten years compared to 27% in 1975. That's almost a double.

Throw in the newly enacted ObamaCare legislation and increased education spending, and it's getting more than a little concerning for all Americans. Spending is simply out of control.

Well, at least now we know where the money's going.

Thanks. Bob.

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