Entitlement Spending Could Top 75% of Budget by 2030

Robert Samuelson notes that there is not enough talk about entitlement reform, either out of the Presidential candidates nor out of the think tanks. This is a problem, of course, because in about 23 years or so, entitlements could eat up 75 percent of the federal budget according to the Congressional Budget Office:

The aging of America is not just a population change or, as a budget problem, an accounting exercise. It involves a profound transformation of the nature of government: commitments to the older population are slowly overwhelming other public goals; the national government is becoming mainly an income-transfer mechanism from younger workers to older retirees.

Consider the outlook. From 2005 to 2030, the 65-and-over population will nearly double to 71 million; its share of the population will rise to 20 percent from 12 percent. Social Security, Medicare and Medicaid—programs that serve older people—already exceed 40 percent of the $2.7 trillion federal budget. By 2030, their share could hit 75 percent of the present budget, projects the Congressional Budget Office. The result: a political impasse.

The 2030 projections are daunting. To keep federal spending stable as a share of the economy would mean eliminating all defense spending and most other domestic programs (for research, homeland security, the environment, etc.). To balance the budget with existing programs at their present economic shares would require, depending on assumptions, tax increases of 30 percent to 50 percent—or budget deficits could quadruple. A final possibility: cut retirement benefits by increasing eligibility ages, being less generous to wealthier retirees or trimming all payments.

It is no wonder that politicians are so quite, none of the current solutions offer any political cover and political cover is what politicians want more than anything else.

Samuelson posits an idea to get the think tanks to at least put pen to paper--a proposal that may not have legs.

Simply put, our political leaders are going to have to make some changes. The problem is that those changes will likely be late in coming because Congress has little ability to deal effectively with problems of the future, despite being paid to do so.

The problem that we as a nation face is that none of the above mentioned proposals are that appealing. So far, the dilemma has been posited as:

1. Raise Taxes
2. Cut Benefits (including raising eligibility rates, which is cutting benefits entirely to individuals ofa certain age)
3. a combination of the two (which is far more likely right now)

But must we be wed to these concepts? Are there other alternatives?

If there are any alternatives, I have not heard of any. I would like to hear some.