THE DANGERS OF MOUNTING NATIONAL DEBT
February 11, 2009
In "I.O.U.S.A.: One Nation. Under Stress. In Debt." authors Addison Wiggin and Kate Incontrera, describe the fiscal state of our union. They say we've lived beyond our means for too long and if something is not done soon, there will be catastrophic consequences for our nation.
What does America's financial mess mean for our entitlement programs? Most American now rely on, or plan to rely on, entitlement programs such as Medicare, Medicaid and Social Security (to mention only the Big Three). The authors raise the question whether our financial mess means these entitlement program are doomed to eventual extinction. There is growing evidence the answer is yes. A study from the National Center for Policy Analysis (NCPA) suggests that without increases in government revenue or reform of entitlements, the following could happen:
- By 2010, the federal government will stop doing 1 in 10 things it's doing now.
- By 2020, the federal government will stop doing 1 in 4.
- By 2030, the federal government will stop performing half of the services it provides.
- By 2050, Social Security, Medicare, and Medicaid will consume nearly the entire federal budget.
- By 2082, Medicare spending alone will consume the entire federal budget.
The authors point out the crunch is coming as the baby boomers are getting older and health care costs are increasing, even as the economy is already generally shaky. They cite a "Hit List" of steps the Peterson Foundation says we should take now to get ourselves out of this mess and these potentially fatal deficits:
- Demand that Washington policymakers address these deficits and that candidates for office disclose their proposed solutions.
- Rethink our priorities; we should not expect the federal government to do what we're not willing to pay for.
- Recognize that there are no easy answers; economic growth is essential, but these problems are so big we'll never be able to grow our way out of them.
- Reinstitute tough budget controls like the "pay-go" rules that expired in 2002; the government needs to stop digging the fiscal hole deeper.
Source: Herb Denenberg, "Mounting National Debt May Be More Dangerous Than Terrorists," The Bulletin, February 11, 2009.
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