President Joe Biden has proposed spending $3.5 trillion on a package of social benefits. That sounds like an awful lot of money, and it is. But consider that amount of money in context.
At first glance, the cost of Boden’s package dwarfs previous transformative social programs such as President Franklin D. Roosevelt’s New Deal, which cost around $324 billion in today’s dollars, and President Lyndon B. Johnson’s Great Society, which cost around $520 billion in today’s dollars. But adjusting for inflation, the U.S. economy is more than 20 times larger than it was in 1934 and five times larger than in 1964, thanks to a U.S. population that has more than doubled, as well as industries that produce far more than their predecessors. So rather than simply adjust for inflation, many economists compare spending to the size of the economy, the GDP. On that basis, the spending by FDR was much larger than Biden’s, and the spending by LBJ was about the same. In an average year 1934 to 1940, New Deal spending was equal to 2.8 percent of GDP; the Great Society averaged about 0.9 percent a year. Biden’s plan averages 1.1 percent of GDP from 2021 to 2031. Overall social spending has increased steadily over the decades as the population ages and incomes rise, regardless of who’s president.