>

Econ 100b

Created 4/30/1996
Go to
Brad De Long's Home Page


Lecture Thirty Three

The Future of the Social Insurance State; Current Policy
(Economics 100b; Spring 1996)

Professor of Economics J. Bradford DeLong
601 Evans, University of California at Berkeley
Berkeley, CA 94720
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net

April 29, 1996


Administration
Long and Very Long Run Deficit Projections
The Current Macro Situation


Administration
Next Wednesday--final substantive lecture on economic policy today
Next Friday--go over practice final
Final for those with conflicts: May 8, 2-5 PM. I'll announce place and exact time on May 6

Long and Very Long Run Deficit Projections

In 1995, federal spending on Medicare plus Medicaid amounted to 3.8 percent of GDP.

In 1995, federal spending on Social Security amounted to 4.7 percent of GDP.

Thus today the big entitlement programs consume some 8.5 percent of GDP; by 2015--when you are in your peak earning years--these programs would, if current laws remain unchanged, amount to 13.7 percent of GDP.

Suppose we wiped out all non-military discretionary programs: that would save only some 3.0 percent of GDP's worth of federal spending in 2015.

Suppose we wiped out all other entitlement programs: that would only save some 3.1 percent of GDP's worth of federal spending in 2015.

Unless we grow faster (in population or in productivity), we have a big problem.

Current federal spending (excluding offsetting receipts): 22.9 percent of GDP



The Current Macro Situation

Unemployment at 5.5 percent
Inflation at 2.5 percent
Real wage growth slow
Income distribution not improving
Debt/GDP ratio constant


>

Econ 100b

Created 4/30/1996
Go to
Brad De Long's Home Page


Professor of Economics J. Bradford DeLong, 601 Evans
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax
delong@econ.berkeley.edu
http://www.j-bradford-delong.net/