After crunching the numbers, Epstein labels the outlook for future growth “a bit unsettling.”
As of 2012, government’s total share of current-dollar GDP is estimated at 35.4%, with federal spending accounting for 23.5 percentage points, and state and local for the remaining 11.9.
By 2050, a mere 38 years from now, the share will jump to 57.2%, based on the [U.S. Government Accountability Office] projection (14.4 percentage points) and the [Congressional Budget Office]’s (42.8), drawn from its “alternative fiscal scenario” — its best educated guess about where things are probably headed. …
… Underlying its projections, the CBO assumed that real GDP between now and 2050 would grow at an annual rate of 2.3%, a fairly conservative assumption we needn’t challenge. Over the 38 years ended in 2011, annual GDP growth ran 2.7%, and that included three serious recessions.
But if, over the next 38 years, government’s share of GDP jumps, as we have indicated, from 35.4% to 57.3%, then the nongovernmental share will shrink from 64.6% to 42.8%. Thus, according to straightforward calculations, nongovernmenal GDP will grow not by 2.3% a year, but by a far punier 1.2%.
We aren’t done. According to Census Bureau projections, the U.S. population will grow by 0.9% a year from now to 2050. So at 1.2% for nongovernmental GDP, growth of nongovernmental per-capita GDP will run a mere 0.3%.
I venture a final prediction: This won’t be the future most Americans want.