When we arrive willy-nilly on the plains of fiscal Armageddon, let no politician say bad intelligence put us there. Republican and Democrat, congressman and president, all have been forewarned.
On July 25, 2001, David Walker testified in the House Budget Committee. As comptroller general of the United States, Walker is the budgetary equivalent of the director of Central Intelligence, and he presented the budgetary corollary of satellite surveillance photos.
"I have consistently stressed," said Walker, "that without meaningful reform, demographic and cost trends will drive Medicare spending to unsustainable levels." Medicare, of course, is the federal health-care program for seniors.
The problem is that while Medicare recipients (like Social Security recipients) are entitled under law to the benefits they receive, the relative number of taxpayers available to pay for those benefits is dwindling. In 1970, there were 4.6 workers per Medicare recipient. In 2030, there will be 2.3. Meanwhile, the cost of modern medicine keeps rising.
The endgame is a titanic clash of interests between taxpayers in their prime, working to support families, and baby boomers in retirement, entitled to a government-supplied monthly cash allowance and subsidized health care.
Immediate action to fix only Medicare's hospitalization coverage, making it solvent for 75 years, Walker said, "would require benefit cuts of 37 percent or tax increases of 60 percent, or some combination of the two."
Every year a fix is postponed the coming crisis deepens.
"Assuming, for example," said Walker, "that Congress and the president adhere to the often-stated goal of saving the Social Security surpluses, our long-term simulations show a world by 2030 in which Social Security, Medicare and Medicaid absorb most of the available revenues within the federal budget."
That, he conceded, may be too rosy.
"This scenario," he said, "contemplates saving surpluses for 20 years -- an unprecedented period of surpluses in our history -- and retiring publicly held debt. Alone, however, even saving all Social Security surpluses would not be enough to avoid encumbering the budget with unsustainable costs from these entitlement programs. Little room would be left for other federal spending priorities such as national defense, education, and law enforcement. Absent changes in the structure of Medicare and Social Security, sometime during the 2040s government would do nothing but mail checks to the elderly and their health care providers."
What has happened since Walker's testimony? Plenty.
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