[lbo-talk] In Re: spending as a percentage of GDP ...

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Sat Oct 16 21:46:10 PDT 2010



> Doug writes:
>
>>> there's no denying that federal spending is way up
>>> and revenues are down.
>
> Here's some more this morning, linked from Krugman's blog[*]:
>
> http://www.econbrowser.com/archives/2010/10/the_everexpandi_1.html

Oh heck, why not ... more!

http://krugman.blogs.nytimes.com/2010/10/16/the-non-surge-in-government-spending-continued/

<quote> What accounts for the higher spending? Well, none of it is government consumption; it's all in transfer payments. BEA data aren't quite as helpful here as I'd like, but it's clear that a large chunk, roughly $100 billion, is unemployment benefits, which have surged along with unemployment, and another large chunk is Medicaid spending, which has surged because the slump has impoverished more people. Some more for other safety net programs, like food stamps. Also, Social Security and Medicare outlays have gone up about $85 billion more than my 11.7 percent norm - medical cost growth, aging baby boomers, and maybe some people taking early retirement because they can't find jobs.

And with that, you've basically explained the growth in government spending. No giant expansion of the welfare state - just business as usual in the face of a horrific slump.

</quote>



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