“Why German — and to an extent, British — government-spending austerity programs are slowly succeeding, whereas the US is heading into a financial abyss with the profligate current “entitlement” (read socialist) policies fanned by our incompetent (in so many ways) Administration — Obamacare, Medicare, Medicaid, Social Security… Socialism bankrupts governments and wrecks economies, especially in the face of a demographic tsunami, the subject of the article below…DR. JOHN A….”
Stop all the dithering, D.C. The baby-boom budget bomb could destroy the economy within 25 years. The time to act is now.
As President Barack Obama and Congress continue to bicker over passing the federal budget and raising the government’s debt ceiling, a report published by one of the nation’s most credible agencies warns that the U.S. could face economic disaster within 25 years due to excessive government spending.
Obamacare is part of the problem, but so are Medicaid, Medicare, and Social Security. The cost of these programs will mushroom as tens of millions of baby boomers reach retirement age.
Scott Pollack for Barron’s
The report was published on Sept. 17 by the nonpartisan Congressional Budget Office. Its most optimistic forecast shows the federal debt growing to 100% of annual economic output by 2038, from an “already quite high 73%” today. That would make the U.S. like France, which in terms of fiscal strength is none too good.
But the CBO implicitly concedes that the outcome is likely to be a lot worse than that, and so it included its “alternative fiscal scenario,” which is far more realistic. It projects the federal debt will grow to 190% of the nation’s annual economic output by 2038. That would make us worse than Greece today, which has a 27% unemployment rate and periodic bloody riots over its dreadful economic conditions.
A Barron’s cover story on the federal debt compared the potential fiscal crisis in the U.S. to that of Greece (“Debt Crisis: Next Stop, Greece,” Feb. 18). Some critics of that shocking analogy failed to notice that it did not originate with Barron’s, but with the CBO itself. In its September 2013 report, the CBO stood by that analogy.
It is a truism of American democracy that politicians’ time horizons rarely extend beyond the next election. That’s why you have to go back nearly 15 years to find a president squarely addressing the baby-boom budget bomb. In his State of the Union address in January 1999, Bill Clinton urged Congress to seize “an unsurpassed opportunity to address a remarkable new challenge, the aging of America.” With the winds of a budget surplus at his back, Clinton declared that “now is the moment for this generation to meet our historic responsibility to the 21st century.”