ABSTRACT
This chapter examines the period 1945–1980. The immediate postwar decades were quite remarkable for several reasons. Strong economic growth and the mass-based tax system established during the war provided a steady stream of revenues that permitted significant new investments in education, infrastructure, and an expansion of national defense. At the same time, it allowed for the growth of social welfare provision (e.g., the expansion of Social Security, the creation of Disability Insurance, the liberalization of Aid to Families with Dependent Children, and the creation of Medicare, Medicaid, and Supplemental Security Income). Most relevant to this volume, the period witnessed a steady reduction in the debt-to-GDP ratio, continuing a pattern exhibited earlier in US history when periods of crisis-driven growth in the debt were followed by periods of deleveraging.
