This week’s cover story in Barron’s, by Gene Epstein, “What, Me Worry?”, attempts to create more attention for our impending fiscal crisis. “Stop all the dithering, D.C. The baby-boom budget bomb could destroy the economy within 25 years. The time to act is now.” As Mr. Epstein says:
- Obamacare is part of the problem but so are Medicaid, Medicare and Social Security.
- The latest budget report from the Congressional Budget Office, published on September 17, makes an “optimistic” forecast that the federal debt will grow to 100% of GDP by 2038 from an already high 73% today.
- But its more realistic forecast is a debt of 190% of GDP by 2038, worse than the current debt of Greece, which has a 27% unemployment rate.
“By 2038 there will be 79.1 million U.S. residents 65 and older, up from 44.7 million today. The working age population, 18 to 64, will grow at a much slower rate, to 214.7 million from 197.8 million today. As a result the dependency ratio will plummet to 2.7 working age people to support each senior in 2038, from 4.4 today.”
“Since the elderly population won’t begin to reach critical mass until the mid-2020’s, the rising tide of red ink will be relatively modest over the next ten years.”
“The nation thus might be likened to a family with about 10 good working years left which needs to cut spending in order to save for a rapidly approaching old age. But alas, it’s a dysfunctional family incapable of rational planning.”
Today we have the option of simply containing the growth of entitlement spending. If we don’t act now, tomorrow we will be forced to make deep cuts in entitlement spending. Today we have the option of making intelligent cuts in discretionary spending. Tomorrow we’ll be forced to make drastic cuts across the board which will make the slowdown in the economy due to the budget sequester “look like a Sunday afternoon walk in the park” (Bill Clinton, May 2013).
What does it take to knock common sense into our national leaders?