By Arnold Kling
According to the General Accounting Office,
the category “all other spending” includes much of what many think of as “government”—“discretionary” spending on such activities as national defense, homeland security, veterans health benefits, our national parks, highways and mass transit, foreign aid, plus “mandatory spending” on the smaller entitlement programs such as Supplemental Security Income, TANF, and farm price supports. The spending increases for all these types of spending taken together are dwarfed by the growth in spending for Social Security, Medicare, Medicaid, and interest on debt held by the public.
Estimated growth in the major entitlement programs results in an unsustainable fiscal future regardless of whether one assumes future revenue will be somewhat below or above historical levels as a share of the economy.
Typical Budget “scorekeeping” is hampered by a number of arbitrary rules, which tend to cause magical drops in spending and increases in revenues. The GAO analysis has the advantage that it can employ more realistic assumptions. The subtitle of the report is “The Bottom Line: Today’s Fiscal Policy Remains Unsustainable.” That says it all.
I say that Medicare is the fiscal equivalent of the Titanic, and its unfunded liability is the iceberg that is sitting in front of it.
Thanks to John Irons for the pointer.