State of the Federal Budget
1-26-11
In his state of the union address, President Obama proposed to build a high-speed rail network reaching 80 percent of Americans within 25 years. But he also proposed to freeze domestic spending for five years. These two goals are incompatible. We can build that rail network, but it will not lead to the economic revival Obama envisions; it will only make it harder to reign in government spending.
More than three-fourths of federal revenues go for just four things: social security, medicare, medicaid, and interest on the national debt. By 2020, those four things will consume more than 90 percent of federal revenues. By 2030, they will consume all of those revenues.
At least, that’s the projection made by a November 15, 2010 report from the Government Accountability Office. It has apparently become news now because the national debt exceeded $14 trillion for the first time on January 20. ...
... Why is social security (and, to a lesser degree, medicare and medicaid) likely to be exempt? If you think AARP is powerful today, just wait until all the baby boomers retire and many of them join. Congress might be able to raise retirement age by a year or two, but it will have a hard time making significant reductions in benefits.
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