Financial Times; December 15, 2011
The American economy reached a watershed 30 years ago when Ronald Reagan came into office. While Europe decided to boost its tax-to-gross domestic product ratio in the 1970s and 1980s to fund an expanded range of education, training, labour market and family support programmes, the US did not. Reagan insisted that less, not more, government was the key to
prosperity and growth, and put emphasis on lowering tax rates on top incomes. Federal revenues in the fiscal year 2011 amounted to 15 per cent of GDP, less than the 19 per cent of GDP of 1980.
Outlays on public services and investments other than health care and pensions have been badly squeezed. Non-security discretionary programmes, including education, early childhood development, energy, environment, roads, power, ports, dams, training, science, NASA, technology, the judiciary and much more, have been hard hit.
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