American Economic History

1
American Economic History

• Brad DeLong
• December 3, 2007

2
The Post-WWII Social Insurance State
3
The Budgetary Future

• Look out over 75 years
• Fiscal gap 7 of GDP
• Spending growth of Medicare and Medicaid 6.5
• Spending growth of Social Security 0.5
• 2001 and 2003 tax cuts 2
• Other -2

4
The Rise of the 20 Federal Government

• 5 government before 1929
• 10 government under the New Deal
• Unclear what will happen immediately after WWII
• But 20 government once the Cold War begins
• Since 1960 defense spending falls, mandatory
  spending--Social Security, Medicare, Medicaid,
  AFDC/TANF, unemployment insurance.

5
The Major Components of Federal Spending
6
The Post-1980 Change

• Spending stops rising as a share of GDP--it
  doesnt go down
• The Reagan deficits
• The Bush II deficits
• The future of the spending line
• Social Security the baby boomers retire
• Medicare and Medicaid health care technology and
  costs