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TNR | Government must keep growing, and taxes must keep rising





That’s politics, of course, but there are a set of unpleasant truths lurking behind this debate over the budget and taxes that policy-makers in Washington need to acknowledge. First, that in order to meet public demands for affordable health care, quality public education, and retirement insurance, government at all levels will need to grow and take up a larger percentage of the nation’s GDP. Second, any significant cuts to these programs’ funding will undermine their effectiveness. And third, the only way to maintain these programs is by raising taxes on income and wealth–and well beyond, the kind of increases that the Obama administration has proposed in negotiations over the fiscal cliff.

The government has grown dramatically over the last century. The federal government has gone from 2.47 percent of GDP in 1913 to 24.33 percent in 2012. Total federal, state, and local spending has gone from 8.1 percent in 1913 to 39.94 percent today. Military spending shot up during World Wars I and II, the Korean War, the Vietnam War, and Ronald Reagan’s military buildup in the 1980s, but it has remained between 4 and 6 percent of GDP over the last two decades. The largest federal, state, and local expenditures – which account for more of the growth over the last century — are for pensions, health care, and education.

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