sábado, 4 de marzo de 2017

If the federal government doesn't reform entitlements soon, the country will face a debt crisis.

The Courage Deficit


The math isn’t complicated. If the federal government doesn't reform entitlements soon, the country will face a debt crisis. There is no disputing this. It's inevitable. The only unknown is timing. And the stubborn determination of some leaders in both political parties to ignore runaway entitlement growth—the most urgent domestic challenge facing the United States—means the crisis will come sooner rather than later.

According to the Congressional Budget Office, in 2008 federal debt was 39 percent of the U.S. gross domestic product (GDP). In the summer of 2016, it was 75 percent of GDP. Without changes, it's projected to be 86 percent of GDP in 2026, and 20 years after that, in 2046, it will be 141 percent of GDP—an all-time high. That is a disastrous trajectory with potentially devastating consequences. In the anodyne jargon of the CBO: "The prospect of such a large debt poses substantial risks for the nation and presents policymakers with significant challenges."

The Heritage Foundation frames the issue in a slightly more colorful way:
Social Security, Medicare, and Medicaid are so large and growing that they are on track to overwhelm the federal budget. These major entitlement programs, together with interest on the debt, are driving 85 percent of the projected growth in government spending over the next decade. The Affordable Care Act, or Obamacare, further adds to the problem, increasing entitlement spending by nearly $2 trillion in just 10 years. The long-term unfunded obligations in the nation's major entitlement programs loom like an even darker cloud over the U.S. economy. Demographic and economic factors will combine to drive spending in Medicare, Medicaid (including Obamacare), and Social Security to unsustainable heights. The major entitlements and interest on the debt are on track to devour all tax revenues in fewer than 20 years.
Twenty years. We will be there before a child born this week can legally have his first beer. Without changes, every penny of taxes collected by the federal government will fund entitlements, the drivers of our debt, and the interest on the debt driven by entitlements. No money for national defense. Not a cent for safeguarding our nuclear stockpile or energy research. Nothing for infrastructure, welfare for the truly needy, unemployment for those displaced in the changing economy.

External factors could slow slightly the spinning of the debt clock numbers (strong economic growth) or speed it up (higher interest rates). But there is nothing at all under serious consideration in Republican-run Washington to reverse them.


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