Is War Between Generations Inevitable?
Friday, November 30, 2001
by Jagadeesh Gokhale and Laurence J. Kotlikoff
Table of Contents
- Executive Summary
- The Perfect Fiscal Storm
- What Color Is the Ink?
- The CBO's Fiscal Fantasy
- A Spending Reality Check
- Social Security's Long-Term Funding Shortfall
- How Valid Are the Social Security Trustees' Future Projections?
- Medicare's Long-Term Funding Imbalance
- Are Medicare's Trustees To Be Trusted?
- Social Security's and Medicare's Long-Term Finances: A Summary
- Generational Accounting
- Taking a Closer Look at Generational Accounts
- Policies to Achieve Generational Equity
- About the Authors
A Spending Reality Check
The latest CBO figures show that far from declining as a share of GDP, federal discretionary spending between FY 2000 and FY 2001 grew almost as fast as the economy. And the CBO's unofficial estimate is that federal spending between FY 2001 and FY 2002 will grow almost twice as fast as the economy! "On-budget" surpluses (non-Social Security and non-Medicare) are, it appears, gone for good. That's highly unfortunate because on-budget surpluses, indeed, massive on-budget surpluses, are critical to paying scheduled Social Security and Medicare benefits over time. Stated differently, the two programs' short-term off-budget surpluses fall far short of the extra funds they need to deal with their own long-term benefit commitments.