AN RX FOR BANKRUPTCY?
March 5, 2007
Comptroller General David Walker calls 2003's Medicare prescription drug benefit "probably the most fiscally irresponsible piece of legislation since the 1960s."
"We can't afford to keep the promises we've already made, much less to be piling on top of them." On CBS News' "60 Minutes," Walker recently warned of the Medicare expansion passed by Congress and signed by President Bush:
- As head of the Government Accountability Office (GAO), Walker presented projections prepared by his agency indicating that by 2040 the federal government will be able to "pay interest on the mounting debt and some entitlement benefits" only.
- The retirement of 78 million baby boomers means that the drug benefit will cost $8 trillion plus interest over the next 75 years, according to Walker, plus $20 trillion for the rest of Medicare.
Absent the original White House proposal's strong cost-saving incentives for competition, the measure's unfunded future federal obligations could cost as much as $12 trillion, according to economists Joseph Antos of the American Enterprise Institute and Jagadeesh Gokhale, now with the Cato Institute.
- At the time of passage, the Congressional Budget Office forecast a cost of $409 billion through 2013; by early 2005, that had been upped to $720 billion.
- That dwarfs the $70 billion in Medicare savings over five years in the president's latest budget.
- The CBO now expects combined outlays for Medicare and Medicaid "to more than double by 2017, increasing by 124 percent, while nominal gross domestic product (GDP) is projected to grow only half as much, by 63 percent."
- In a 2005 study, Antos and Gokhale found the government's unfunded liability totaled a whopping $21.9 trillion.
Source: Editorial, "An Rx For Bankruptcy?" Investor's Business Daily, March 2, 2007.
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