December 23, 2011 was supposed to be a day of high drama in Washington as Congress voted on a deficit reduction plan produced by the congressional super committee. Things didn’t work out that way because the super committee never agreed on a plan.
There was, however, some budget news on Dec. 23, although it came with little drama. In fact, it was depressingly familiar. So familiar that it went largely unnoticed. Once again, Americans were given official notice that the nation is on an unsustainable fiscal path.
According to the 2011 Financial Report of the U.S. Government, released that day by the Treasury Department, even with enactment of last year’s Budget Control Act, “the debt-to-GDP ratio is projected to increase over the next 75 years and beyond if current policies are kept in place, which means that current policies are not sustainable.”
Not only was this conclusion unsurprising but so was the central cause: a growing mismatch between social insurance obligations (primarily for Social Security, Medicare and Medicaid) and dedicated resources.
The present value of the 75-year projected excess expenditures for these three programs over dedicated resources jumped to nearly $34 trillion, an increase of about $3 trillion from the previous year’s report. And an alternative scenario that many experts believe is more likely puts that total at $46 trillion.
“The Nation must bring social insurance expenses and resources into balance before the deficit and debt reach unprecedented heights,” the report warns. “Delays will only increase the magnitude of the reforms needed and will place more of the burden on future generations.”
This, of course, was precisely the problem that the failed super committee was supposed to address.
2011 Financial Report of the U.S. Government
GAO Press Release on U.S. Financial Report