By
nEW
In 2004 the federal
government ran a budget deficit of $112 billion. This excess of government spending
over government revenue is only the tip of an iceberg. Log-term projections of
the government’s budget show that under current law the government will spend
vastly more than it will receive in tax revenue in the decades ahead. As a
percentage of gross domestic product the total income in the economy taxes are
projected to be about constant. But government spending as a percentage of GDP
is projected to rise gradually but substantially over the next several decades.
One reason for the rise in
government spending is that Social Security and Medicare provide significant
benefits for the elderly population which is increasing in size. Over the past
half century medical advances and lifestyle improvements have greatly increased
life expectancy. In 1950 a man aged 65 could expect to live for another 13
years now he can expect to live another 17 years. The life expectancy of a
65-year-old woman has risen from 16 years in 1950 to 20 years today. At the
same time people are having fewer children. In 1950 the typical woman had three
children. Today the number is about two. As a result of smaller families the
labor force is growing more slowly mow than it has in the past.
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