Just when the nation’s economic outlook is starting to brighten, the Congressional Budget Office tosses a big bucket of reality our way.
The CBO, which provides nonpartisan economic analysis for Congress, announced last week that U.S. debt held by the public will likely rise from 74 percent of the economy to 106 percent of the economy by 2039.
And it found the bulk of the escalating debt will be driven by increases in the cost of health benefits.
“The unsustainable nature of the federal tax and spending policies specified in current law presents lawmakers and the public with difficult choices,” CBO said in the report. “Unless substantial changes are made to the major health care programs and Social Security, spending for those programs will equal a much larger percentage of GDP in the future than it has in the past.”
This is incredibly disheartening because Congress — whether led by Republicans, Democrats or control is split — has proved itself to be incapable of making tough decisions that have resulted in a meaningful reduction in spending or an increase in revenue.
About three years ago a “Super Committee” was formed in Congress to reduce spending (or increase revenue) about $1.2 trillion from a projected $44 trillion over the next 10 years. That’s less than 3 percent. Yet, it couldn’t be done. Everything in the budget was sacrosanct to somebody.
In the wake of the last week’s CBO report, those in Congress were saying all the right things. It “is a stark reminder of the urgent need for entitlement reform,” said Sen. Orrin Hatch, R-Utah.
Don’t expect any action anytime soon.
When the target for cuts is entitlements, there is absolutely no political will to make even a small cut. And that’s not just the fault of Congress. Voters, too, bristle at cutting government benefits — from health care to Social Security.
As a share of the economy, the CBO reported, the budget deficit will increase to 3.7 percent in 2024 and 6.4 percent in 2039, from 2.8 percent in 2014.
Spending and borrowing, and borrowing, and borrowing simply can’t go on without severe consequences.
Tough decisions will have to be made. Benefits can’t remain at the same levels. Either the amount paid out per person is reduced or benefits are distributed based on income and need.
To say that isn’t a popular idea, particularly with those who have paid into Social Security for decades, is like saying the deck of the Titanic got a little wet in 1912. It’s the understatement of understatements.
Still, reality will have to be faced. The numbers released last week suggest a Titanic-like disaster if nothing changes.