Using the recommendations of the Bowles/Simpson deficit reduction group as a starting point, TIME columnist Fareed Zakaria offers the following observation about the choice that lies ahead for the United States:
The problem we need to fix is simple. Americans have an appetite for government benefits that greatly exceeds their appetite for taxes. For more than a generation, we have squared this dishonest circle by borrowing vast amounts of money. As more people age, this gap between what we want the government to provide and what we are willing to pay for is going to widen to an unsustainable level. Over the next 75 years, benefits under entitlement programs will exceed government revenue by $40 trillion. The federal budget deficit, if unattended, will reach 24% of GDP in 2040 ?well beyond Greek and Irish territory. At that point, the measures it would take to close the gap are so punitive ? we’re talking tax hikes of 70% or spending cuts of 50% ? that it is inconceivable that we will make them. If by some chance we were to make them, they would put the economy in a death spiral.
What Zakaria does not explore is the extent to which the ?appetite for government benefits? is based on the premise that someone else will pay for those benefits. One suspects that as more people realize there is no free lunch, that appetite will shrink.
