Over the next 30 years, according to data from the Congressional Budget Office, Medicare will run a $40 trillion cash deficit, Social Security will run a $19 trillion cash deficit and the interest on the resulting program debt will be $23 trillion. (To inflation-adjust these figures, trim by one-third.)
CBO projects that, over the next 30 years, the national debt will grow from $20 trillion to $92 trillion ($52 trillion after inflation) — or much higher if interest rates return to historically typical levels.
Politicians brush aside the issue by promising easy fixes. Tax the rich? Doubling the 35 and 37 percent tax brackets to 70 and 74 percent would close just one-fifth of the long-term Social Security and Medicare shortfall. Even seizing all annual income earned over $500,000 would not come close. Popular proposals to more aggressively tax banks, investors, hedge-fund managers and oil and gas companies are a cumulative rounding error compared with these deficits.
On the spending side, slashing the defense budget to European levels would close just one-seventh of the gap. Cutting waste and foreign aid can close only a small percentage of it.
In reality, balancing the long-term budget without reforming Social Security and Medicare (and fast-growing Medicaid) would require either nearly doubling income-tax rates across the board or eliminating nearly every remaining federal function.
Uncle Sam must rein in retirement benefits or we’re headed for economic disaster
CBO projects that, over the next 30 years, the national debt will grow from $20 trillion to $92 trillion ($52 trillion after inflation) — or much higher if interest rates return to historically typical levels.
Politicians brush aside the issue by promising easy fixes. Tax the rich? Doubling the 35 and 37 percent tax brackets to 70 and 74 percent would close just one-fifth of the long-term Social Security and Medicare shortfall. Even seizing all annual income earned over $500,000 would not come close. Popular proposals to more aggressively tax banks, investors, hedge-fund managers and oil and gas companies are a cumulative rounding error compared with these deficits.
On the spending side, slashing the defense budget to European levels would close just one-seventh of the gap. Cutting waste and foreign aid can close only a small percentage of it.
In reality, balancing the long-term budget without reforming Social Security and Medicare (and fast-growing Medicaid) would require either nearly doubling income-tax rates across the board or eliminating nearly every remaining federal function.
Uncle Sam must rein in retirement benefits or we’re headed for economic disaster
