The U.S. Congressional Budget Office just issued a gloomy report that essentially says baby boomers are going to suffer big time from future government cuts.
The budget numbers tell a clear story, the report says. Given the aging of the population and the rising cost of health care, attaining a sustainable budget for the federal government will require the United States to deviate from the policies of the past 40 years in at least one of the following ways:
1. Raise federal revenues significantly above their average share of GDP;
3. Make considerable changes to the sorts of federal benefits provided for older Americans;
3. Substantially reduce the role of the rest of the federal government—that is, defense (the largest single piece), Food Stamps, unemployment compensation, other income security programs, veterans’ benefits, federal civilian and military retirement benefits, transportation, health research, education and training, and other programs—in the country's economy and society.
Basically, the U.S. as a society will either have to pay more for government, accept less in government services and benefits, or both.
For many people, none of those choices is appealing—but they can't be avoided for very long.
The report notes that, during the past 40 years, government spending has ranged from as low as 18.2 percent of gross domestic product (GDP) in 2000 and 2001 to as high as 25.0 percent in 2009, averaging about 21 percent.
Revenues, however, have averaged only 18 percent of GDP.
In one of the many surveys conducted of late on the subject, the Rochester Business Report reports that nearly two-thirds of respondents to the RBJ Daily Report Snap Poll favor making changes to rein in Social Security benefits, which could indeed emerge as part of a final budget deal.
While 35 percent of respondents said they do not favor any cuts to Social Security benefits, 20 percent support limiting benefits for the wealthy and 19 percent support an increase in the age at which people are eligible to receive full retirement benefits. More than one-quarter of respondents said they favor both of those measures.
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