Cut the deficit but not my benefits - yes, it is possible
February 13, 2010
– Comments (15)
No sooner did I remark here that there enough fat cats to cut the deficit without cutting the benefits, than another poster challenged me with this rebuff:
US debt to GDP, including unfunded obligations, is 400%+...most of that is future entitlement spending. Those unfunded obligations are going to be tapped in large part over the next 2 decades, and entitlement payments could exceed total federal revenues. It's possible that the deficit could be reduced to zero without cutting any entitlement, but only if all other gov't spending equals zero. Within the next decade, interest payments on the national debt could exceed 50% of total federal revenues...so it's not likely that even 25% of revenues would be available for entitlements...that's a massive shortfall. Unless we have massive unexpected productive growth over the next decade, or are able to increase taxes 300%, I'm not certain how we can avoid cuts to entitlement spending.
Yes, I know that unfunded GAAP liabilities of USA Inc make something like 50 Trillion, 60 Trillion, 70 Trillion, etc. (choose your number). But they just forget to mention that these are unfunded liabilities for the next 50, 60, or 70 years. When you do the arithmetic, you get a very manageable figure on the order of $1 Trillion a year. Just save $1 Trillion a year with a real healthcare reform, stop spending $500 Billion a year on military paranoia, and bring the tax system in line with European standards, and you will get even more savings than you need.
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