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What Limits Social Spending

Abstract The forces that are most likely to set the ultimate limits on social spending as a share of GDP are not those usually imagined. The deadweight costs of such spending, and the taxes behind them, fail to show the predicted upward spiral. The experience of 1960–1981 shows a major role for shifts in relative age-group sizes, but with an approaching sunset to the effect of aging on social-spending patterns. In addition, the further are the middle pre-fisc income ranks from the poor, the lower the political tendency to spend on any major type of social program.