Special to The Star
It is often said that our political system responds only to a crisis. If that turns out to be true, our children and grandchildren are in big trouble.
With the first of the 77 million baby boomers about to retire, the cost of Social Security and Medicare will place a rapidly growing strain on the budget and the economy.
What's the plan to pay for it? None, other than to borrow ever-higher amounts until a crisis forces corrective action.
No one can say when a crisis will hit, but by the time it does, the economy will likely be burdened with a debilitating amount of debt, leaving painful benefit cuts and steep tax increases as the only options. Doing nothing to avoid such a gut-wrenching outcome would be an act of fiscal and generational irresponsibility.
Oddly enough, this grim prospect is generating neither outrage nor action. Our elected leaders and many of their constituents seem to believe that if there is no immediate crisis, there is no problem. They need a fiscal wake-up call.
The truth is that current fiscal policy is unsustainable over the long term and that the time to do something about it is now. That is the blunt message that a group of budget experts, including U.S. Comptroller General David Walker, is bringing April 24 to Metropolitan Community College-Penn Valley in Kansas City.
It is the next stop in the Fiscal Wake-Up Tour, organized by the Concord Coalition. It will include speakers with diverse perspectives from the Brookings Institution and the Heritage Foundation.
The basic facts are a matter of arithmetic, not ideology. Over the next 25 years the percentage of the population aged 65 and older will grow by 50 percent, while the number of workers is estimated to rise by only 13 percent.
This reflects a permanent transformation to an older population -- and a permanent rise in the cost of programs such as Social Security, Medicare and Medicaid, which already comprise 42 percent of the federal budget.
Demographic change is only part of the problem. Health-care costs, which continue to outpace economic growth, also play a big role. If historic growth rates persist, by 2050 Medicare and Medicaid will absorb as much of our nation's economy as the entire federal budget does today. Without a change in policy, today's 20-year-olds can expect that by the time they retire the size of government as a share of the economy will be roughly twice its current size.
This raises an obvious question: How will we pay for it?
Borrowing is not a viable solution, because the rising cost of entitlements is not a temporary blip. It gets bigger with time. Incurring ever-rising levels of debt would result in staggering interest costs and ultimately a level of debt that would crush the economy.
The real choices require scaling back future benefit promises, raising taxes to pay for them or some combination of both. Economic growth alone will not be enough, nor will trimming everyone's favorite targets -- waste, fraud and abuse.
Because these options are politically difficult, the active involvement of the American people is critical. That is what the Fiscal Wake-Up Tour is all about. Without greater understanding of the problem among the public, community leaders, business leaders and media, elected leaders are unlikely to break out of their comfortable partisan talking points and unlikely to find solutions.
Concord's founding co-chairman, former Sen. Paul Tsongas of Massachusetts, said: “The bond between parent and child is nature's strongest. Providing for the well-being of the young is how every generation of Americans undertook their stewardship.”
The question is whether we will face up to the challenge and fulfill our generational stewardship or put the future at risk by waiting for a crisis.