Reining in Federal Spending
February 10, 2015
As President Obama has proposed his "wish list" budget calling for $4 trillion for 2016, the federal budget deficit and our country's debt should be receiving more attention.
Michael Tanner, senior fellow at the Cato Institute, says the federal debt will continue to remain a major problem, even if lawmakers won't talk about it. Consider:
- The debt recently reached $18 trillion -- approximately 101 percent of the United States' GDP.
- The Congressional Budget Office projects the debt will rise to $27.3 trillion within the next decade.
- In reality, Tanner says the numbers are too low, because they ignore Social Security and Medicare's unfunded liabilities -- including those puts the debt at $90.6 trillion.
The root of the problem? Federal spending, which is projected to reach 36 percent of GDP by 2050. More specifically, entitlement spending must be reformed -- Tanner notes that Social Security, Medicare and Medicaid are responsible for almost half (47 percent) of federal spending and are only growing. Social Security has a $24.9 trillion shortfall, while Medicare has $48 trillion in unfunded liabilities.
Source: Michael D. Tanner, "Medicare and Social Security Tabs Coming Due," Cato Institute, February 2015.
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