> Why should it scale linearly with GDP?
It doesn't have to. But GDP is a good proxy for the tax base. If the problem is deficits and spending isn't increasing linearly with GDP, that suggests the problem is with taxation. Not spending.
It doesn't have to. But GDP is a good proxy for the tax base. If the problem is deficits and spending isn't increasing linearly with GDP, that suggests the problem is with taxation. Not spending.
For simplicity, imagine one program like food stamps. It costs X dollars per person on the program.
The cost of that program should scale with inflation and population. If taxes and government should scale with GDP, that implies either making more programs or expanding existing ones. As an example, you'd increase the amount of people eligible for food stamps as the population became wealthier.
I can understand that as an argument but implying that the government isn't growing because the relationship to GDP hasn't changed seems to prove the opposite to me.
The federal budget, if the size of government remained static, should be Inflation * Population increase, shouldn't it?
GDP is rising faster than inflation so the services that the government provides should take less, as a percentage, of the population's money.
The logic for food stamps does not really apply to other programs though. The amount of calories people need is constant, so supplying a given population with enough food to survive should be easier as time goes on. However for most things, we're not aiming for a fixed outcome but one that scales with GDP. For example medicine - providing people with 1970s levels of care would certainly be cheaper adjusted for inflation than it was in the 1970s, but providing access to modern medicine in modern hospitals performed by current doctors is substantially more expensive, and providing 2050 medicine will be more expensive still.
The standard of medical care you'd receive today for the same price, scaled by inflation, is higher than it was in the 70s.
Spending is related to debt only inasmuch as it exceeds taxation.
This happened, I believe, in FY 2024 [1][2].
We're currently running a 6.5% primary deficit/GDP [3]. With real GDP growing around 2.5% a year [4], that means we need to cut about 4% of GDP, or $1.2tn [5], to stabilise our debt/GDP ratio. That's two Medicaids [6]. (Which would probably trigger a recession.)
[1] https://comptroller.defense.gov/Portals/45/Documents/defbudg... $842bn
[2] https://budget.house.gov/imo/media/doc/the_baseline_and_inte... $870bn
[3] https://bipartisanpolicy.org/report/deficit-tracker/
[4] https://fredblog.stlouisfed.org/2024/06/how-much-did-the-us-...