Bad fiscal times ahead, warns Budget office
ASSOCIATED PRESS
The government's three chief benefits programs are so huge and growing so fast that without raising taxes to historic highs, today's spending policies probably will be unsustainable in coming decades, the Congressional Budget Office said yesterday.
In a look ahead at the next 50 years, Congress' nonpartisan fiscal analyst also concluded that the problem is so immense that economic growth alone will not be enough to solve it.
The three big programs — Social Security, Medicare and Medicaid — are expected to undergo dramatic increases as the aging, 76 million-strong baby-boom generation begins gradually relying on them at the end of this decade. Expenditures are also being driven higher as health-care costs continue to balloon.
Social Security is so large — and Medicare and Medicaid expanding so rapidly — that limiting the growth of defense, education and other spending that Congress controls would not be enough for sound budget policy, the report said.
"Substantial reductions in the projected growth of spending or a sizable increase in taxes as a share of the economy — or both — will probably be necessary to provide a significant likelihood of fiscal stability in the coming decades," the budget office said in a report.
The 60-page report compared current and future spending and revenues to the size of the U.S. economy, now about $11 trillion. Economists consider the percentage that results a useful way to measure the federal budget over time, because it illustrates how affordable particular programs or policies might be.
The report also warned that if policy makers decided to let the accumulated federal debt continue to grow, it would have "a corrosive and potentially contractionary effect on the economy."
The report's conclusions echoed similar studies that have been done in recent years. |
