Explain what is happening to spending on Social Security and Medicare as the U.S. population continues to age. Why might this spending change pose problems for the U.S. economy?
What will be an ideal response?
Spending on programs such as Social Security and Medicare has increased from less than 3% of GDP in 1960 to more than 10% of GDP today, and is expected to grow to nearly 20% by 2050. Since most of the money for these programs comes from taxes paid by people currently working, as the population ages, there are fewer workers paying taxes relative to the number of people receiving these payments. This results in a funding crisis that can be solved only by either reducing these government payments, reducing expenditure on other programs, or raising the taxes paid by current workers.
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The concept of economic rent can be applied to
A) land only. B) land and natural resources only. C) land, natural resources, and paintings by dead masters only. D) any resource that cannot be replicated exactly.
Which of the following is the most accurate statement about nominal and real interest rates?
a. Nominal and real interest rates always move together. b. Nominal and real interest rates never move together. c. Nominal and real interest rates often do not move together. d. Nominal and real interest rates always move in opposite directions.