The dramatic growth of public "social welfare" spending that has dominated domestic politics since World War II appears to be ending, a new government report indicates.
The report by the Social Security Administration shows that, for the second year in a row, federal, state and local government outlays for welfare and related programs dropped as percentage of the gross national product.
In 1978, according to the report, these outlays totaled $394.5 billion, or 19.3 percent of the gross national product. In 1976, the high point, they had totaled 20.4 percent after a generation of growth.
Back in 1955, governments at all levels in the United States were spending only 8.6 percent of the GNP for such items as Social Security, welfare, medical aid and food programs for the poor, public education, housing aid to the poor and others.
With the expansion of the Social Security system to cover the whole population, and with initiation of Great Society and similar programs -- Medicare, Medicaid, food stamps, broader welfare eligibility -- the percentage of the GNP spent on these programs began shooting up.
They leaped to 15.2 percent by 1970, then to 19.9 percent by 1975, then peaked at 20.4 percent in 1976. In 1977 they slipped to 19.7 percent, but economists said then that they'd like another year or so of statistics before concluding that the era of rapid expansion of social program spending was over. Then, in 1978, they slumped again to 19.3 percent.
Yesterday, John Palmer, assistant secretary of health, education and welfare, said that "in the absence of major new programmatic thrusts," the figures clearly indicate that social program outlays have leveled off and no longer will be rising as a percent of the GNP.
Other economists cited defense spending, public resistance to increased taxation and the "maturing" of Social Security, by far the biggest program, as reasons for the phenomenon.
In the early 1950s, Social Security, then a young program, paid out relatively few benefits and had relatively few beneficiaries. Today, however, virtually everyone who works any substantial time or who is married to an employed person gets benefits eventually. There are 35 million beneficiaries. e
Brookings Institution economist Joseph Peachman said that now that Social Security has expanded to its full scope, its outlay growth won't be nearly so rapid as in earlier years.
He said the fact that social expenditures as a percentage of the GNP slipped a few tenths last year isn't as significant as the fact that they are clearly failing to keep rising as in the 1955-76 era. A minor change up or down, he said, can be caused by the fact that the GNP rises or falls rapidly in one year, much faster than inflation. So there can be a slight "up tick" or the reverse.
But overall, "the point is well taken that with minor ups and downs, the ratio of expenditures to GNP will not go up," but will remain henceforth at about 19 to 20 percent.
However, enactment of national health insurance or a comprehensive welfare program could produce another leap in social welfare outlays as a percentage of the GNP, Pechman said.
Palmer, agreeing, said new outlays for long term care of the elderly, as the population ages rapidly, could also drive up the percent of the GNP spent on social programs.
"This will be a major emerging social welfare issue for the rest of the century," he said.
Sidney Jones, a resident economic scholar at the American Enterprise Institute, said, "If you're not going to be adding new programs like Medicare and Medicaid were added in the 1960s," then there probably wouldn't be big upsurges in the proportion of national income devoted to social welfare. But since programs like Social security are "indexed" for inflation, the overall proportion would probably stay at current levels unless changed by new programs.
Of the $394.5 billion spent by government at all levels for social welfare programs in fiscal 1978, $240.5 billion came from the U.S. government, or about three-fifths. Of the $154 billion state-and-local government outlays, nearly $91 billion was for education.