In the past few days we have seen the Financial Times and Robert Samuelson in the Washington Post arguing that unless the United States makes significant reforms to entitlement programs it faces economically devastating deficits. The amount of money spent on these entitlements will push aside all other necessary spending.
The government is now making the same argument. At least the comptrollers office of the Government Accountability Office is. See this report (pdf alert). Read the report for yourself, but here are some highlights. In 1966, mandatory spending made up only 26% of the budget. In 1986 it was 42%. It is now 53% of the federal budget. What does that mean? Before we build one bridge, hire one social worker, pay one soldier, buy one bullet for that soldier, before one Pell Grant is provided we have already spent over half of the budget, or roughly $1.5 trillion. That's before Congress makes one appropriation. Over the next 25 years, the GAO estimates a 77% growth in our economy, yet Social Security, Medicaid and Medicare will grow 127%, 224%, and 235% respectively. Even if they underestimate economic growth (and this is usually the case) it is hard to see how our economic growth keeps up with the pace of entitlements.
The GAO makes various suggestions for correcting the problem, such as a line item veto, adjusting the Social Security COLA, increasing the age of normal retirement, and having supplemental investment accounts for individuals.
The GAO notes four deficits we face as a people: Budget, Balance of Payments, Savings, and...Leadership. The latter three reforms mentioned just above will have various constituencies screaming about lack of compassion for the elderly. These cries for compassion mask the fact that we are burdening our children and grandchildren with either crushing debt or crushing taxation, all so we can keep supporting ourselves on "free" government money. It will indeed take leadership to make any meaningful changes.
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