Longtime Newsweek columnist Robert Samuelson’s latest piece does a masterful job of laying out the facts on the fiscal crisis facing the country and the massive ?candor gap? afflicting leaders of both parties. Some key points:
First, from 2011 to 2020, the administration projects total federal
spending of $45.8 trillion against taxes and receipts of $37.3
trillion. The $8.5 trillion deficit is almost a fifth of spending. In
the last year (2020), the gap is $1 trillion, again approaching a
fifth: spending is $5.7 trillion, taxes $4.7 trillion. All amounts
assume a full economic recovery; all projections may be optimistic. The
message: There’s a huge mismatch between Americans’ desire for low
taxes and high government services.Second, almost $20 trillion of the $45.8 trillion of spending
involves three programs — Social Security, Medicare (health insurance
for those 65 and over) and Medicaid (health insurance for the poor —
two-thirds goes to the elderly and disabled). The message: The budget
is mainly a vehicle for transferring income to retirees from workers,
who pay most taxes. As more baby boomers retire in the 2020s, deficits
would grow.Third, there is no way to close the massive deficits
without big cuts in existing government programs or stupendous tax
increases. Suppose we decided to cover all future deficits by raising
taxes. Taxes would rise in the 2020s by roughly 50 percent from the
average 1970-2009 tax burden.That’s the guts of it. At age 65, average Americans live for another
18 years. Government now subsidizes each of them an average of about
$25,000 a year (almost $14,000 Social Security, $11,000 Medicare). We
cannot sensibly afford all these subsidies without oppressive tax
increases (see above), deep cuts in defense and other programs or
immense budget deficits that someday might trigger another financial
crisis.
