ON U.S. DEBT, IT'S ALL QUIET ON PRESIDENTIAL CAMPAIGN TRAIL
April 25, 2007
The nation, already wallowing in debt, has no plan to cope with the tsunami of new costs that will arrive as baby boomers begin to retire. Instead of contributing to Social Security, the boomers will draw from it and as waves of boomers join the Medicare rolls, the program's costs will swell, swamping the ability of younger Americans to pay for them, says USA Today.
The first surge is now within sight:
- In 2010, the annual Social Security surplus, used to mask the size of the already-massive federal budget deficit, begins to shrink, according to the trustees report, forcing the next president and future Congresses to raise taxes or borrow more.
- This would crimp living standards, either by taking money away from people, or by boosting interest rates, making everything from homes to college educations more expensive. In 2016, the surplus, currently $68 billion, turns to a deficit, further compounding the problem.
Medicare is even more troubling:
- Last year, it burned through $408 billion.
- That's bad enough for a program that cost only $7.5 billion in 1970.
- But by 2016 it will have more than doubled, to $863 billion; that's almost like creating another Pentagon budget.
Later in the century, the projections for health and retirement spending reach such unsustainable levels that if left unaddressed, they would bring down the U.S. economy. Here are a couple of projections that illustrate the absurd dimensions of the problem:
- If Medicare and Social Security are funded through new taxes, the federal government would swell from approximately 20 percent of the American economy to as much as 56 percent by mid-century, according to the non-partisan Concord Coalition.
- Retiring the current $9 trillion national debt and paying upfront for the projected Medicare and Social Security shortfalls would cost $46 trillion, almost equaling the estimated net worth of all Americans.
Source: Editorial, "On U.S. debt, it's all quiet on presidential campaign trail," USA Today, April 25, 2007.
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