America's Long-Term Budget Outlook
Just how bad is the long-term outlook for America’s fiscal future? Putting it mildly, it's a fiscal mess. An editorial in last week’s Washington Times summed it up rather well in the very first paragraph:
“In order to meet the promises made to Medicare and Social Security beneficiaries through 2082, the government would have to deposit $42.9 trillion in an interest-bearing account today and then draw down the cumulating funds as needed over the next 75 years. That is the essential conclusion from the latest reports by the Medicare and Social Security trustees.”
By the way, that $42.9 trillion is about triple today’s entire GDP. Here’s how the U.S. General Accountability Office introduces the problem:
“Over the next few decades, the nation’s fiscal outlook will be shaped largely by demographics and health care costs. As the baby boom generation retires, federal spending on retirement and health programs—Social Security, Medicare, and Medicaid—will grow dramatically. A range of other federal fiscal commitments, some explicit and some representing implicit public expectations, also bind the nation’s fiscal future. Absent policy change, a growing imbalance between expected federal spending and tax revenues will mean escalating and ultimately unsustainable federal deficits and debt.”
So you wonder exactly why the Congress and the President continue their merry spendthrift ways? Thankfully, there are people thinking about the problem of these so-called entitlements. According to the Wall Street Journal’s economic blog:
“A broad coalition of federal budget experts, spanning the ideological spectrum of Washington think tanks from left to right, proposed Monday that Congress and the president set explicit, “sustainable” long-term budgets for Social Security, Medicare and Medicaid and create a mechanism that would force changes when projected spending exceeds budgeted amounts.
“The proposal follows two years of discussions among 16 budget experts convened by the Brookings Institution, largely populated by liberal Democrats, and the Heritage Foundation, largely populated by conservative Republicans.”
Further information about the extent of the fiscal problem can be found at the GAO link cited above. More information is available at the Heritage Foundation (extensive discussion of the entitlement problem as well as detailed information about a fiscal wake-up tour). Participation in today’s forum included scholars from several organizations that span the political spectrum.