NCPA - National Center for Policy Analysis

Skyrocketing Costs Of Government

June 25, 1996

In this election year, critics of government spending are reminding voters of warnings contained in a bipartisan report issued early last year: federal spending will grow from 22 percent of gross domestic product to 37 percent in 2030, unless something is done.

The January 1995 report of the Bipartisan Commission on Entitlement and Tax Reform warned that:

  • State and local outlays would add another 10 percent to the 37 percent figure -- meaning that taxpayers would be forking over 47 percent of GDP to all levels of government by 2030.
  • Medicare's share of GDP alone will rise to 7.39 percent from 2.69 percent.
  • Social Security will grow to 6.42 percent of GDP from 4.68 percent.
  • Spending on pensions and compensation for veterans and civil servants will bloat the total even further.
  • Without changes in the laws that dictate spending, federal payroll and income taxes will have to rise 70 percent. But the effect won't be financial only, experts warn. There could be severe social repercussions. Without reform, politics could soon consist of three competing groups.
  • Retirees will be demanding full payment for the social programs they have paid into over the years.
  • A growing underclass, further burdened by ballooning taxes, will insist on more welfare relief.
  • Sandwiched in the middle will be sullen wage-earners, wondering why they even bother to show up for work.

Meanwhile, President Clinton has vetoed bills that would prevent Washington's bite of the economy from nearly doubling during peacetime. Cuts are needed just to keep taxes and federal spending at current levels. Without a radical change in direction, historians in 2030 will look back on our era to determine the cause of our irresponsibility, political scientists warn.

Source: Stuart Sweet (Capitol Analysts Network), "Big Government: The Stakes in '96," Investor's Business Daily, June 25, 1996.


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