U.S. must ‘wake up’ to fiscal realities
Jan 21, 2009 9:33 AM
According to a trio of budget and policy analysts speaking at the American Farm Bureau Federation’s 90th annual meeting in San Antonio, America’s future financial well-being is at risk because of a future, long-term federal budget deficit. Such indebtedness, incurred by the federal entitlement programs of Social Security, Medicare and Medicaid, could drive the United States to an unprecedented fiscal crisis in fewer than 40 years.
The speakers are members of a collaborative venture known as the “Fiscal Wake-Up Tour.” The non-partisan tour brings knowledgeable researchers and recognized experts before citizen groups so they can discuss the federal government budget situation. Since September 2005 the tour has visited more than 40 cities across the nation.
Gene Steuerle, vice-president of the Peter G. Peterson Foundation, a non-profit entity formed to help restore fiscal responsibility to public budget-making, explained that since the 1930s “we decided we would spend larger shares of our national income on health care and retirement. The question is whether we decide that is the way we still want to go.”
Bill Bixby, executive director of the Concord Coalition, a nonprofit organization formed to campaign for national fiscal responsibility, said entitlement programs now take 42 percent of the $1.3 trillion federal budget. Two socio-economic trends will greatly enlarge this percentage over the course of the next five decades.
First, the percentage of citizens who are 65 years of age or older will become a much larger portion of the national population. In 2007 this age group accounted for less than 13 percent of the population, but by 2047 it will constitute more than 20 percent.
Second, health care costs continue to increase. In 2007 they absorbed approximately 5 percent of the Gross Domestic Product. Based upon current projections, they will amount to more than 20 percent of the by 2047.
If correct, the projections warn of a historic challenge for the nation. A debt of such proportions for three programs is a novel phenomenon. Bixby argued that this trend is “unsustainable,” leaving very few tax dollars for other federal programs.
“This is not a numbers issue,” he said. “It is a moral issue. It involves what kind of a future we will be leaving to future generations.”
Entitlement program costs will squeeze virtually every other federal program. As a result, “we essentially have a budget for a declining nation. It encourages us to work less, to invest less and to have more debt,” Steuerle said.
Alison Fraser, director of economic policy studies at the Heritage Foundation, warned, “We are riding on the first wave of the fiscal tsunami that is coming. We are the early warning system for that tsunami.”
Despite the dismal forecasts, all three speakers offered hope that policy decisions made now can begin to change the possible consequences ahead. Bixby urged his listeners to adopt a position of “stewardship” when examining the federal budget. The budget, he explained, is both a statement of national priorities and a vision for the future.
“These are problems we created. The solution is in our hands,” Bixby said.
Steuerle assured attendees that a remedy is possible, despite the scope of the problem.
“I think the public can be appealed to,” he said. “I think part of the way to do that is in pointing out what they are losing. They will be concerned about their children.”
Fraser pointed out that entitlements are not voted on by Congress. They merely acquire more funding by virtue of previous legislation that mandates their funding. Citizens should lobby their national representatives and demand regular appraisals of these programs, she said. By doing so, significant change will be forthcoming.
