In Friday’s Wall Street Journal Kimberley Strassel has a column “Rebooting the Budget Talks” which discusses a new approach to budget planning being taken by Wisconsin Senator Ron Johnson, a Republican. Mr. Johnson wants to go beyond the usual 10 year budget planning by using 20 and 30 year projections from the Congressional Budget Office for both tax revenue and spending. Even assuming that current federal government spending grows only by population growth plus inflation (which would require unusual restraint), by 2043 the national debt will have increased by $72 trillion, with public debt (on which interest is paid) amounting to 139% of GDP. See “Thirty-year deficits and debt” for more detail.
Of course, it is easy to say that 30 year projections are way too long to have real credibility, and so let’s just stick to the usual 10 year projection which shows the public debt shrinking from today’s 75.1% to 73.6% in 10 years and so therefore becoming “stabilized”. Most of us old folks will be gone but today’s young and middle aged people will still be around 30 years from now and so should be very much concerned about our likely fiscal condition in 2043. And the CBO 30 year projection assumes such unlikely restraint that the debt will probably be even greater by then.
The reason why a 30 year projection is so much worse than a 10 year projection is because the entitlement explosion is much greater in the out years compared with just the next 10 years alone. Conclusion: the mild restraint on entitlement growth (such as a chained CPI) being reluctantly offered by Democrats today is an entirely inadequate way to curtail entitlement growth for the long haul. Let’s get real and propose real solutions to our nation’s urgent fiscal problems. We’ve been kicking the can down the road for way too long already. We can no longer afford to postpone significant action until some future date when conditions are more amenable for reform. We must act now!