|
Long-Term Budget Outlook by
Congressional Budget Office
U.S. Facing Economic
Peril Due to Programs for Seniors
Dec.
22, 2003 The rapid growth of the senior citizen population principal
recipients of Social Security, Medicare and Medicaid is putting the
U.S. in serious financial peril, according to the Long-Term Budget
Outlook just released by the Congressional Budget Office.
Social
Security is so large, and Medicare and Medicaid are 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.
The number of
people age 65 or older will double during the next 30 years, while the
number of adults under age 65 will grow by less than 15 percent.
Charts Below - 1.
Growth of 65+ population; 2. Growth of Social Security
Executive Summary
As health care costs
continue to grow faster than the economy and the baby-boom generation
nears eligibility for Social Security and Medicare, the United States
faces inevitable decisions about the fundamentals of its tax and
spending policies. This Congressional Budget Office report looks at a
range of possible paths for federal spending and revenues over the next
50 years and combines them into various hypothetical scenarios.
Analysis of those scenarios suggests
the following conclusions:
> Driven
by rising health care costs and an aging population, spending on
entitlement programs especially Medicare, Medicaid, and Social Security
will claim a sharply increasing share of the nations economic output
over the coming decades.
> Unless
taxation reaches levels that are unprecedented in the United States,
current spending policies will probably be financially unsustainable
over the next 50 years. An ever-growing burden of federal debt held by
the public would have a corrosive and potentially contractionary effect
on the economy.
> As
the U.S. tax system is currently configured, revenues will increase as a
share of gross domestic product. Under current law, taxpayers will face
higher rates, with detrimental consequences for work, saving, and
economic growth.
> Fiscal
policy could be financially sustainable if the growth of health care
costs slowed significantly from historical rates. But even in those
circumstances, tax revenues would probably need to be higher than they
have been in the past.
> If
taxation is restricted to the levels that prevailed in the past, the
growth of entitlement spending will have to be substantially reduced.
Restricting the growth of outlays for defense, education,
transportation, and other discretionary programs would not be enough to
ensure fiscal sustainability.
> Likewise,
economic growth alone is unlikely to bring the nations long-term fiscal
position into balance. Moreover, issuing ever-larger amounts of debt or
dramatically raising tax rates could significantly reduce growth.
The full report is available -
Click Here
|
