In an effort to start making sense of what is an indisputably confusing situation, we asked some of the most thoughtful people we know the question: How will America change as a result of the economic downturn? Here's Michael Lind, Whitehead Senior Fellow at the New America Foundation and director of its American Infrastructure Initiative . The effects of the greatest financial crisis since the Depression are only now beginning to be felt. By the time the crisis has run its course, a decade or more from now, the U.S. will be a radically different place. Government may grow dramatically and permanently as a share of U.S. GDP. While the average OECD country has a government share of around 40 percent of national GDP, today American government at all levels--federal, state, and local--hovers around 30 percent of GDP, somewhat higher if you count tax-favored private benefits like employer-provided health care and 401(k)s. But even before the crisis, the cost of an aging population would have added (without inflated health care costs) about 4 percent of GDP to the government share in the next half century, except in the unlikely event that Congress carried out deep cuts in entitlements for middle-class seniors. Now, in the years ahead, the federal government may bail out not only homeowners, but also many retirees whose private savings have been devastated. And state and local governments may get a federal bail-out as well. In democra ...
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