"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," said Comptroller General David Walker."
The statement above appeared in the first-ever Citizens Guide to the federal government, issued yesterday by the Department of the Treasury and the Office of Management and Budget at the request of the Government Accountability Office. The guide may just be the first comprehensive and comprehensible government that addresses a complex issue. If every future government report were this clear and direct; half of Congress would be voted out.
The 12-page report highlights the major budgetary shortfalls facing the United States and includes some bleak projections as to when programs like Social Security and Medicaid will begin going bankrupt.
"Absent reforms, the Social Security Trust Funds will be exhausted in 2041 and the Medicare Part A Trust Fund will be exhausted in 2019. Revenue dedicated to these entitlement programs under current law will not be enough to pay for scheduled Social Security and Medicare Part A benefits."
But escalating Social Security and Medicare costs are only a small part of the problem. In decades to come, the nation's greatest cost will be interest on the money we're borrowing now from foreign nations to run our programs. In this year's budget, $239 Billion dollars was allocated to simply pay off annual interest on the country's $9 trillion debt. By 2070, total government cost is projected to be 50 percent of Gross Domestic Product, mainly because of mounting interest cost. Cost-to-GDP ratios have not been this high since World War II, when cost briefly reached 44 percent of GDP.
The next time you hear a politician promising new government programs to solve a problem, listen closely to how he/she intend to pay for that program before voting. Only two possible ways exist: raising taxes or cutting other programs. To even come close to balancing the budget before true disaster hits, government spending must be massively curtailed, programs must be made more efficient, and citizens must push their two-terming representatives and Senators to seriously weigh the long-term implications of every piece of legislation and pork that comes across their desks. If they do not, the next credit crises will involve the United States itself, not Fannie Mae.