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Friday, July 22, 2011

Spending Like It's 1966

Jen Beeson

Deputy Executive Director

In 1966, Lyndon Johnson was president. The Beatles were at the top of the charts. The Civil Rights Movement marched on, and the U.S. involvement in the Vietnam War deepened.

The country was different then. The population was smaller and, on average, younger. Life expectancy was seven years shorter. And if you were old, you were more likely to be poor. Health care was less expensive, but many of today's most beneficial treatments, surgeries, and prescription drugs for a variety of diseases had not yet been developed.

The federal government was much smaller and served fewer people. Federal spending was about 18 percent of the gross domestic product (GDP). Medicare began in July of 1966, serving many fewer seniors than the program of today. Consequently, total spending on the program was a fraction of what it is today. In 1966, scientists and doctors were years away from making dramatic innovations in the treatment of heart disease, cancer, and other diseases.

A lot has changed since then. But now Republicans in Congress want to take us back to 1966. This week, the House of Representatives approved the Cut, Cap, and Balance Act, which would require the federal government to shrink to the size it was in 1966. The bill requires the federal government to spend no more than 18 percent of the GDP.

An arbitrary cap on federal spending – especially a cap set so low – is neither sensible nor reasonable. Bob Greenstein, executive director of the Center on Budget and Policy Priorities, called the bill "one of the most ideologically extreme pieces of major budget legislation to come before Congress in years, if not decades." Lawmakers who want the federal government of 2011 to spend like it is 1966 are deliberately ignoring the deep changes that have taken place in our society over the last 45 years. A cap of 18 percent GDP does not reflect:

  • An additional 112 million Americans;
  • The aging of the Baby Boomers;
  • The improvement in the quality of health care (and the parallel growth in health care costs);
  • The increase in the standards of living; and
  • New commitments to homeland security and anti-terrorism efforts.

A sensible approach to balancing the budget would include both reasonable spending cuts and additional tax revenues. But the conversation must start by acknowledging how deeply our society has changed since 1966.

The Center for American Progress developed this clever graphic to show how times have changed. There are many reasons we don't want to go back to 1966 – and not just because of the bellbottoms.