The Cut, Cap and Balance legislation would restrict federal spending to 18 percent of the previous year’s gross domestic product. That’s even more restrictive than most people realize:
18 percent of last year’s GDP is not the same as 18 percent of GDP. Because the economy and the population grow each year, GDP grows each year. If you use current estimates, 18 percent of last year’s GDP is likely to be something like 16.7 percent of this year’s GDP. The last year we cleared that bar was 1956. In 1965 and 1966, however, we were in the 17 percent range, which I considered close enough to count as “the last time we were anywhere near there.”
So what was the United States like back then?
We are an older country, with more retirees receiving the Social Security and Medicare benefits they’ve earned during their working lives. Social Security benefits have been consciously increased to improve the quality of life for retirees. Health care costs have multiplied so providing Medicare, veterans’ care, and Medicaid is much more expensive. Education has become more costly, and government fuel costs have risen along with everyone else’s.
Here are the changes graphically, also from Center for American Progress: