Former Obama administration economic advisor Lawrence Summers speaks… (Andrew Harrer / Bloomberg )
WASHINGTON -- Despite the campaign rhetoric, federal spending as a share of the economy will keep rising no matter who wins the White House this fall because of key structural factors facing policymakers, said former Obama administration advisor Lawrence H. Summers.
Those factors, including rising entitlement costs and debt payments, mean the federal government's share of the U.S. economy will keep increasing over the next four years whether President Obama or Republican Mitt Romney sits in the Oval Office, Summers said in an opinion article in the Financial Times on Monday.
"For the next three months, the U.S. will debate the merits of growing versus shrinking government," said Summers, a Harvard economist who served as Obama's top economic aide from 2009 into 2010.
"But for the next three decades it will confront the reality that major structural changes in the economy will compel an increase in the public sector's fraction of the total economy unless there is a substantial scaling down in the functions that the federal government has long performed," Summers said.
For structural reasons, it will be difficult to scale down the role of the federal government, he said.
"Even preserving the amount of government functions the U.S. had before the financial crisis will require substantial increases in the share of the economy devoted to the public sector," Summers said.
The aging of the U.S. population means that spending on Social Security, Medicare and Medicaid will "greatly expand" unless those programs are scaled back significantly, Summers said. Also, the rising U.S. national debt, and an anticipated increase in interest rates in coming years, will force the government to set aside more money to service that debt.
Summers cited other reasons making it difficult to scale back federal spending. Among them are that things the federal government spends its money on, such as healthcare and higher eduction, are rising in cost.
And, he said, efforts to expand the use of technology to save government money, and to try to ferret out waste and fraud, have been shown to produce "only negligible savings."
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