August 16th, 2011
Econintersect: Jared Bernstein, a liberal economist who has served and continues to serve a number or roles in the Obama administration, has taken on a popular conception of political conservatives. In this case he has chosen to argue using data. Data presented by Bernstein on his blog, On the Economy, Bernstein says the data shows Social Security costs, currently running at approximately 5% of GDP, will grow very gradually over the next 70 years. The burden will be approximately 7% of GDP by 2080, according to CBO (Congressional Budget Office) data. Follow up:
Follow up:Here is the graph Bernstein presented:
Bernstein points out that there is a funding shortfall over the 75-year horizon amounting to 0.8% of GDP. He suggests that is not difficult to resolve.
What is obvious in the graph and is also discussed by Bernstein, is the growth of federally funded health programs from about 7% of GDP this year to about 22% by 2080. Here is what Bernstein says about that:
…as a share of GDP, neither Social Security nor other spending (which includes the discretionary spending that everyone’s all gung ho to slash away at) are driving government spending as a share of the economy. It’s health care. And as I’ve stressed every time this comes up, that’s not a gov’t problem—that’s just a problem. In fact, health costs grow faster in the private than in the public sector.
The final statement is subject to debate: GEI Analysis has an article showing that, from 2000 to 2010, growth in healthcare costs were approximately the same per capita in public and private systems.