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Addressing the Debt Now Means Addressing It on Our Own Terms

Posted By Kathryn Nix On October 15, 2010 @ 2:00 pm In Economics | Comments Disabled

The 2010 fiscal year just ended, but America’s fiscal crisis has just begun. In 2010, the Congressional Budget Office’s (CBO) preliminary estimates [1] show that the federal government spent $3.45 trillion, amassing a deficit of $1.3 trillion. Spending on entitlement programs, which include Medicare, Medicaid, and Social Security, comprised 41 percent of the budget.

And this is just the beginning. By 2050, entitlement programs will consume the entire federal budget. To keep up with this level of spending, the CBO predicts [2] that tax rates would have to grow to 19 percent from 10 percent for low earners, to 47 percent from 25 percent for middle earners, and from 35 percent to a whopping 66 percent for high earners. This level of taxation would cripple the economy.

Tuesday night in Milwaukee, the Concord Coalition hosted [3] Representative Paul Ryan (R–WI) and former Service Employees International Union President Andy Stern to discuss solutions for the nation’s dismal fiscal outlook if deficit spending is not addressed—and soon. As Josh Gordon, policy director for the Concord Coalition, pointed out, enormous deficits are not going to go away. While the U.S. has, on average, maintained a sustainable level of deficit spending of around 2–3 percent of gross domestic product, the deficit is not projected to return to anywhere near this size again.

Although Ryan and Stern represent opposite ends of the political spectrum, they both agreed that the U.S. needs a plan to get the nation’s fiscal house back in order. Ryan has proposed a plan that he calls the “Roadmap for America’s Future” that addresses entitlement spending.

Ryan explained that if we act now, we can address the debt on our own terms, but if nothing is done, America will lose its say in the matter—these programs simply won’t be there for younger generations. Both Ryan and Stern are members of the National Commission on Fiscal Responsibility and Reform that is scheduled to make its report by December 1.

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URL to article: http://blog.heritage.org/2010/10/15/addressing-the-debt-now-means-addressing-it-on-our-own-terms/

URLs in this post:

[1] Congressional Budget Office’s (CBO) preliminary estimates: http://online.wsj.com/article/SB10001424052748703358504575544351734226956.html?mod=googlenews_wsj

[2] the CBO predicts: http://www.heritage.org/budgetchartbook/entitlements-double-tax-rates

[3] the Concord Coalition hosted: http://www.concordcoalition.org/act/event/2010/0922/congressman-paul-ryan-and-former-president-seiu-andy-stern-join-concord-coalitio

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