Treasury Tells a Very Scary Story
Despite recent improvements noted in the government's short-term finances, due to rising revenues and a declining deficit, America's economy sits on shaky ground. The main culprit remains government debt, which has increased in 2007 to a total of $9 trillion. The government has $4 trillion in its coffers from Social Security and Medicare trust funds Those programs will need all the reserves they can muster, as 80 million "baby boomers" will soon be eligible for benefits.
"Absent reforms, the Social Security Trust Funds will be exhausted in 2041 and the Medicare Part A Trust fund will be exhausted in 2019," according to the report. By 2019, people due to receive Medicare benefits would receive only 79 percent of what they were expecting. And by 2041, those due Social Security benefits would receive only 75 percent of what they were owed.
Extrapolating further, America's debt could reach unprecedented levels if the current course is not corrected. In 2040, the debt predicament could be as bad as its historical high after World War II, when the federal debt held by the public reached 109 percent of gross domestic product (GDP). Things have stabilized since then, but rising costs could send that number spiking to 600 percent of GDP by 2080.
"Unless the government makes fundamental changes in its budget, entitlement, discretionary spending and tax policies, and soon, the coming surge of spending on Social Security and Medicare will bring a fiscal tsunami of spending and debt that threatens to swamp our ship of state, damaging the U.S. economy," says the Comptroller General of the GAO, David M. Walker, in a press release that accompanies the report. (Walker since has announced his plans to resign.
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