The Congressional Budget Office has predicted that the federal deficit will skyrocket in the next two decades, and Washington must take action now if the United States is to avoid "fiscal and economic calamity," said Sen. Rob Portman.
In an opinion piece for The Wall Street Journal,
the Ohio Republican wrote that the retirement of baby boomers — and the cost of their accompanying Medicare and Social Security benefits — are largely driving the problem. Obamacare is also pushing spending upward, he said.
"This year's budget deficit of 'only' $500 billion has brought some complacency on federal spending and deficits. It shouldn't. The Congressional Budget Office's long-term budget outlook released on July 15 shows a $40 trillion increase in debt over the next two decades," Portman wrote.
He added that the estimate is the "rosy scenario" as it does not account for recessions, wars, terrorist attacks, or natural catastrophes, and also assumes that interest costs on the national debt will be permanently held down by near-record low interest rates.
Portman also said the assumption that the problem is related to a decrease in tax revenues would be misguided: the CBO projects revenues climbing an additional 1 percent of the economy for each decade. Instead, all of the rising deficit will come from spending increases, he said.
"Nearly all of that spending will come from Social Security, health entitlements, and the resulting interest costs on the swelling national debt," he wrote. "The retirement of 77 million baby boomers into Social Security and Medicare is not a theoretical projection. Demography is destiny."
Portman says Washington must do three specific things to avert what he says is an impending crisis.
First, the government needs to stimulate economic growth, which will create jobs and add to tax revenue. This requires comprehensive tax reform, more domestic energy exploration, a replacement of Obamacare that is patient-centered, an expansion of exports through new free trade agreements, and a crackdown on government red tape.
Secondly, he says, the government must avoid large tax increases. "Drowning our children in taxes is no better than drowning them in debt to pay our retirement benefits," he wrote.
Finally, there must be a reform of Social Security and health entitlements, Portman said. This can be achieved by adjusting retirement ages, means-testing benefits for those of higher incomes, and supporting patient-centered healthcare. By saving $4 trillion over the decade, the budget would return to a path of sustainability, he noted.
"Today's declining deficit is temporary, and the longer we wait to enact reforms, the more abrupt and painful they will be. It is time for everyone to come together and start to erase the red ink."
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