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#1
08-10-2011, 08:19 AM
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Outlays for Medicare, Medicaid, and Social Security
Over the past 50 years, federal spending has increased as a percentage of GDP, and its composition has changed dramatically. Spending for mandatory programs has grown from about 30 percent of noninterest outlays in the early 1960s to about 60 percent in recent years. Most of that growth has been concentrated in the three largest entitlement programs: Medicare, Medicaid, and Social Security. Together, federal outlays for those three programs have accounted for roughly 45 percent of primary federal spending over the past 10 years, up from 25 percent in 1975. In the future, projected growth in entitlement spending explains almost all of the projected growth in total noninterest spending—and the two big government health care programs largely drive that increase. Medicare and Medicaid are responsible for 80 percent of the growth in spending on the three largest entitlements over the next 25 years and for 90 percent of that growth by 2080 (see Table 1-3). CBO projects that net federal spending on Medicare and Medicaid will rise from about 5 percent of GDP in fiscal year 2009 to about 10 percent in 2035 and over 17 percent in 2080.5 Spending on Social Security is projected to rise at a much slower pace, from almost 5 percent of GDP in 2009 to about 6 percent in later years.
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Books serve to show a man that those original thoughts of his aren't very new at all. Abraham Lincoln 
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#2
08-10-2011, 08:24 AM
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Moreover, the fundamental cause of the rapidly rising debt in CBO’s long-term scenarios is not economic fluctuations resulting from business cycles. Instead, debt soars because of unrelenting growth in federal spending on health care programs and a rise in Social Security spending as a share of GDP, combined with a much smaller increase in tax revenues. The ever-greater budget deficits projected under those scenarios would negatively affect the economy through several channels. More government borrowing would drain the nation’s pool of savings, reducing investment in the domestic capital stock and in foreign assets. In addition, a worsening fiscal situation might put pressure on monetary policy, potentially endangering the Federal Reserve’s ability to keep inflation low and stable. If the budget continued along the path of rising debt, serious concerns about fiscal solvency would arise. Investors would require the government to pay an interest premium on its securities to compensate for the risk that they might not be repaid or that the value of their securities would be eroded by inflation. Such a premium would drive up the cost of borrowing. Finally, the longer the growth of debt persisted, the larger and more costly would be the policy changes needed to control debt, which could further increase the burden of fiscal tightening on future generations.
Most economists agree that greater government borrowing would raise interest rates and lead to greater private saving. But the offset would be far from complete, so national saving would decline.10 That decline would in turn reduce investment in the United States but not on a one-for-one basis (at least initially), because higher interest rates would attract foreign capital to the United States and perhaps induce U.S. investors to keep more of their money at home. As investment was displaced by government debt, GDP would grow more slowly and eventually decline. In the longer run, as the debt continued to grow and unless the interest premium was very large, capital would probably flee the United States, further reducing investment.
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Books serve to show a man that those original thoughts of his aren't very new at all. Abraham Lincoln
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#3
08-10-2011, 08:26 AM
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What Are the Costs of Delaying Action on the Budget?
The choice facing policymakers is not whether to address rising deficits and debt but when and how to do so. Debt is projected to soon grow to unsustainable levels even under the extended-baseline scenario, which assumes that spending on programs other than Medicare, Medicaid, and Social Security will decline substantially (relative to GDP) over the next 10 years and that revenues will increase as a percentage of GDP over the long term from their average historical levels. Under the alternative fiscal scenario, debt is projected to soar almost immediately. Reducing the growth of the major entitlement programs—Social Security, Medicare, and Medicaid—would go a long way toward lowering the projected levels of debt relative to GDP. The aging of the population has the most significant impact on entitlement costs over the intermediate term, but policymakers have little control over such demographic changes. However, policy changes that altered the eligibility age for programs or modified benefits for the elderly could help offset some of the effects of aging on federal spending. In the long run, the growth of health care spending per beneficiary will drive federal entitlement spending. It would be difficult to produce a sustainable fiscal policy without reducing such spending growth.12 The longer that policy action on the budget is put off, the more costly and difficult it will be to resolve the long-term budgetary imbalance. Delays in taking action would create three major problems: ■ The amount of government debt would rise, which would displace private capital—reducing the total resources available to the economy—and increase borrowing from abroad. ■ The share of federal outlays devoted to paying interest on the federal debt would grow, so lawmakers would have to make ever-larger policy changes to achieve balance. As interest costs rose, policymakers would be less able to pay for other national spending priorities and would have less flexibility to deal with unexpected developments (such as a war or recession). Moreover, rising interest costs would make the economy more vulnerable to a meltdown in financial markets. ■ Uncertainty about the economy would increase. The longer that action was put off, the greater the chance that policy changes would ultimately occur suddenly, possibly creating difficulties for some individuals and families, especially those in or near retirement. Announcing changes to entitlement programs or to the tax structure well in advance would give people time to adjust their plans for saving and retirement. Those adjustments could significantly reduce the impact of such policy changes on people’s standard of living.
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Books serve to show a man that those original thoughts of his aren't very new at all. Abraham Lincoln
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#4
08-10-2011, 08:30 AM
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from page three:
Slowing the Growth of Social Security Spending Three broad approaches for constraining the rise in Social Security benefits have received considerable attention. Under those approaches, policymakers could: ■ Reduce the size of the initial payments that new Social Security beneficiaries are scheduled to receive, ■ Increase further the age at which workers become eligible for full retirement benefits (which would reduce the initial benefit received at any given age of claiming), or ■ Reduce the annual cost-of-living adjustment that beneficiaries receive once they become eligible for benefits. Several CBO papers have analyzed those and other approaches for restructuring the Social Security program.9 In addition to reducing future Social Security benefits, policymakers could restore long-term actuarial balance to the program by raising Social Security taxes or dedicating more general revenue to it. If policymakers decide to slow the growth of Social Security benefits, considerations of both fairness and economic efficiency point toward enacting new legislation long before the changes take effect. People generally consider the size of their expected Social Security benefits when deciding how much to save and how long to work. Because those benefits are a major source of income for many people, it will be important to enact any benefit reductions well in advance to give people enough time to respond by adjusting their plans for saving and *retirement. --------------------------------------------------------------------------------
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Books serve to show a man that those original thoughts of his aren't very new at all. Abraham Lincoln
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#5
08-10-2011, 08:32 AM
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joey, this is why discretionary spending isn't the problem:
Discretionary Spending A distinct pattern in the federal budget since 1962 is the diminishing share of spending provided through annual appropriations (see Figure 4-2). As a share of the budget, discretionary spending has fallen from 68 percent in 1962 to 38 percent in 2008. Relative to the size of the economy, such spending has declined from 12.7 percent of GDP in 1962 to 8.0 percent in 2008.
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Books serve to show a man that those original thoughts of his aren't very new at all. Abraham Lincoln
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#6
08-10-2011, 08:36 AM
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Quote:
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#7
08-10-2011, 08:45 AM
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#9
08-10-2011, 11:43 AM
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Quote:
the point of all that above is that ss isn't just in need of a 'tweak', that it has no need of anything being done right now. the longer they wait to do something, the worse it'll get-not better. the gap will be larger, the debt higher, the ability to close the gap more difficult, and the necessary increases in taxes...er, revenue enhancements will be virtually impossile to accept. changes need to be done, now, and need to have automatic adjustments in future. this problem will not go away.
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Books serve to show a man that those original thoughts of his aren't very new at all. Abraham Lincoln
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#10
08-10-2011, 11:50 AM
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Quote:
Baby....exactly where are your hot spots besides the obvious, of course.Also,have you ever actually sat on someone's face?If so,did your muffy-poo wiggle on the face or did it pose a stoic profile?
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