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The Real Threat to the Middle Class

Posted By Conn Carroll On May 19, 2008 @ 1:38 pm In Ongoing Priorities | Comments Disabled

Trying to stoke fears that the middle class in America is dying [1], progressives recently have taken to distributing a chart [2] showing household debt rising steadily over the past fifty years. The Atlantic’s Megan McArdle has been doing a fine job putting these worries in perspective [3]. But a front page story [4] in today’s USA Today adds reminds where the real threat to middle class finances comes from:

Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That’s nearly $500,000 per household.

When obligations of state and local governments are added, the total rises to $61.7 trillion, or $531,472 per household. That is more than four times what Americans owe in personal debt such as mortgages.

Earlier this year, 16 federal budget experts from a bi-partisan group of seven think tanks (including: American Enterprise Institute, Brookings Institution, Concord Coalition, Heritage Foundation, New America Foundation, Progressive Policy Institute, and Urban Institute) addressed this problem in a report calling for major reform of our entitlement spending [5] including:

  • The three major entitlement programs should be converted into regular “discretionary” programs that compete on a level playing field with such programs as defense, rather than pre-empting funds for these programs or automatically running up long-term deficits.
  • Congress and the President should enact long-term budgets for Social Security, Medicare, and Medicaid and be required to review them every five years. The rules for the five-year review must include a trigger or action-forcing device that automatically make changes when projected spending exceeds budgeted amounts.
  • The long-run costs of these three programs should be made visible in the budget at all times and considered when decisions are made.

Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2008/05/19/the-real-threat-to-the-middle-class/

URLs in this post:

[1] the middle class in America is dying: http://economistsview.typepad.com/economistsview/2008/04/the-coming-coll.html

[2] distributing a chart: http://www.prospect.org/csnc/blogs/ezraklein_archive?month=05&year=2008&base_name=chart_of_the_day_household_deb

[3] putting these worries in perspective: http://meganmcardle.theatlantic.com/archives/2008/05/the_death_of_the_middle_class_1.php

[4] front page story: http://www.usatoday.com/news/washington/2008-05-18-Redink_N.htm?loc=interstitialskip

[5] major reform of our entitlement spending: http://www.foundry.org/2008/03/31/the-evasions-must-end/

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