Friday, June 14, 2013
The Nation's Budget Challenges Haven't Changed
This week, the U.S. News “Debate Club” blog posed the question of whether the federal government’s short term deficit has been reduced enough, following the less dismal than usual projections in last month’s Congressional Budget Office report. I weighed in on the debate, arguing that the United States still faces serious fiscal challenges, especially the challenge of controlling the long-term growth of entitlement spending.
But the core fiscal challenge for the country, which remains unaddressed, is the unrelenting growth of entitlement spending -- a problem that will become acute in the next twenty years. Between 1973 and 2012, entitlement spending rose from 7.4 percent of GDP to 13.1 percent of GDP. By 2035, spending on Social Security, Medicare, Medicaid and the health care law's new entitlements is expected to add another 5.4 percent of GDP to the spending side of the federal ledger. Absent serious reform, the budgetary pressures created by this entitlement spending surge will either force massive cuts in the rest of the budget or very large tax increases, or perhaps trigger a debt crisis.
You can read (and vote for!) the rest of my post here.