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Politics : The Castle -- Ignore unavailable to you. Want to Upgrade?

To: RMF who wrote (5497)	3/11/2010 5:13:53 PM
From: TimF	Read Replies (1) \| Respond to of 7936

That may have been true in the past, but NOW we are putting SO MUCH debt paper out there that it's really unsustainable. The current interest on the debt is expensive, and so harmful (since it increases future government spending and borrowing), but hardly unsustainable. Its lower than many other countries as a percentage of GDP, and if didn't keep piling new debt on to it, rolling over the old debt would not be very difficult. The problem is that spending is scheduled to grow by a lot. That's mostly an issue of existing entitlements getting more expensive (both because of the demographic bulge of the baby boom, and because life expectancy is going up faster than the retirement age, and because the per year per person increase in benefits has generally gone up in real terms). But its also an issue of new entitlements (Medicare Part D, if you don't just consider it an extension of and old entitlement Medicare, Now new health care "reform" packages, maybe something else in a few years or a decade or two), and of non-entitlement spending. We might be able to get a handle on non-entitlement spending. We can avoid adding new entitlements. But the old entitlements are eating up the budget and even the economy. We can't just cancel the old entitlements (its political impossible, and practically would cause too much disruption). So what can we do? Well if we can increase the retirement age so it goes up with life expectancy (which would be very hard politically but not utterly impossible), it might be enough so that we can get by. If it isn't we can adjust the COLAs down, and find other ways to at least nibble at the edges of entitlement costs. But even if that's done, both the solution to the problem, and the remaining problem after the solution, will still be expensive. There is no simple way to avoid the problem, or to contain it so that it only hurts the very rich or some other selected group. Whatever we do we will face some difficulty.