Spending has been between 33%-44% of GDP over the past 50 years. Right now it’s around 38%, a high level but not historical high.

What is historically high is the debt to GDP which recently crossed 100%. Relative to GDP, debt has been increasing faster than spending, which implies a revenue problem.

Not to say there isn’t wasteful spending.

The real issue though is revenue. Spending is likely to only increase as the demographics shift and the elderly population represents a higher proportion of the total population. Spending on health-care and other senior-related services will skyrocket. To prevent debt from ballooning, the government will need to bring in more revenue (and cut back in certain areas).

Economic policy wonk by day. Personal finance writer by night. I write about investing, debt, and all things related to money. Editor of Making of a Millionaire

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