The editorial by Senator Rob Portman is appropriately subtitled 'Demography is destiny: The retirement of 77 million baby boomers is not a theoretical projection.'
It should be required reading by all Americans.
In plain words, we're setting ourselves, or better said, our kids and grandkids, for an unnecessarily and clearly avoidable lousy future of weak economic growth and unaffordable indebtedness.
So let's face facts and take a peek at just how unlike the future opportunities for our kids and grandkids are likely to be compared to those we were given.
You see, my fellow oldsters, facts are stubborn things.
"This year's budget deficit of "only" $500 billion has brought some complacency on federal spending and deficits. It shouldn't. The Congressional Budget Office's long-term budget outlook released on July 15 shows a $40 trillion increase in debt over the next two decades.
While a $500 billion deficit is welcome compared with the $1.4 trillion peak in 2009, the decline is temporary. The CBO's other, more realistic "alternative baseline," which assumes Congress continues current policies, projects new debt of $10 trillion over the next decade, followed by $100 trillion over the subsequent two decades. . . .
And that's the rosy scenario: It assumes no more recessions, wars, terrorist attacks or natural catastrophes, and that interest costs on the national debt will be permanently held down by near-record low interest rates; also that certain ObamaCare price controls widely derided as unrealistic will continue forever.
What drives this long-term debt? It's not falling tax revenues. After averaging 17.3% of the economy over the past 50 years, revenues, the CBO assumes, will level off at 18% of the economy within a decade—with a separate, more detailed estimate showing revenues climbing an additional 1% of the economy each subsequent decade. That estimate shows a typical middle-class family's income-tax burden nearly doubling over the next 25 years. Unfortunately, even these soaring tax receipts cannot keep up with surging spending.
After averaging 20% of the economy over the past 50 years, spending is projected by the CBO to jump to 23%, 29%, and then 34% of the economy over the next three decades—at which point the CBO simply stops counting. All of the rising deficit will come from spending increases (rather than revenue declines), and nearly all of that spending will come from Social Security, health entitlements and the resulting interest costs on the swelling national debt.
Those who dismiss long-term budget projections should re-read the last paragraph. The retirement of 77 million baby boomers into Social Security and Medicare is not a theoretical projection. Demography is destiny.
While Social Security's Old Age program faces bankruptcy in 20 years, Medicare is in even worse shape because (in addition to demographics) it must also deal with rising health-care costs. Thus, the typical couple retiring next year will have paid approximately $140,000 in lifetime Medicare taxes and premiums, yet will receive nearly $430,000 in Medicare benefits. Multiply that by 77 million retiring baby boomers, and it's clear that Medicare is unsustainable.
ObamaCare is also driving spending upward. According to the CBO, over the next decade, ObamaCare will be the single largest driver of rising health-care spending. . . .
The CBO estimates that a deal saving $4 trillion over the decade would put the budget on a path to sustainability. Adjusting Social Security and Medicare's retirement ages, means-testing benefits for upper-income retirees, and supporting broad-based, patient-centered health care can not only help close the debt, it can also create a stronger economy.
Today's declining deficit is temporary, and the longer we wait to enact reforms, the more abrupt and painful they will be. It is time for everyone to come together and start to erase the red ink."
Living within our means and paying our bills when due is neither a new nor a difficult concept to understand.
Neither is it difficult to understand that borrowing from the future to spend what we don't have today will place a huge burden on future generations.
Neither is it hard to realize that an ever growing weaker and more indebted financial situation will only make our nation and its citizens more vulnerable to the crazies of the world in the future.
What are we waiting for is one question for which I have no good or even half good answer? Do you? Do our politicians?
Financial literacy and personal responsibility begin at home.
Think about it.