The latest National Review features an article from Andrew G. Biggs that offers a clear picture of the pending budget crisis tied to Social Security, Medicare, and Medicaid.
To balance the budget over the next 25 years would require an immediate and permanent 30 percent increase in all federal taxes. That is the future we face, and it is a future of our own making.
Entitlements traditionally have paid generous benefits ? financed by affordable taxes ? to rich and poor alike, because the ratio of workers to beneficiaries has been high. Those days are gone and will not return. Maintaining entitlements in their current form will require either crippling taxes or crippling debt. Alternatively, we can rethink the entitlement philosophy, focusing resources where they?re needed most, empowering individuals to make choices and giving them incentives to reduce waste, and buttressing personal retirement savings.
We spend 9.7 percent of GDP on entitlements today, and by 2030 we will spend around 14.4 percent.
What a good time for the government to take on even more responsibility in the health-care sector.
