US Federal Deficit A Problem For Future Generations

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Ay yi yi…

The Treasury Department released a report on Wednesday showing that U.S. federal government spent more money in March than in any other month, ever. Ever. This spending pushed the federal deficit up 13% to USD$96 billion.

Let’s see. What have we been spending all this money on? The report shows:

“Defense spending: USD$67.8 billion in March and USD$268.3 billion for the year so far, up 7%.”

Oh, it gets better, dear reader. This is just a drop in the bucket…

“Social Security: USD$55.5 billion in March and USD$306.8 billion for the year, up around 6%.

“Medicare and Medicaid: USD$83.4 billion in March and USD$418.4 billion for the year, up 15.6%. Spending on the Medicare drug benefit is up 144%.”

This is what U.S. Comptroller David Walker likes to call our country’s “fiscal cancer.” Walker thinks that while it is important to think about and make strides in Social Security reform, what scares the beejeezus out of him are the rising health care costs.

The United States spends 50% more of its economy on health care than any other country. Walker points out that Medicare is already underwater by USD$32 trillion – five times the imbalance in Social Security.

Helicopter Ben, over at the helm of the Federal Reserve, has already admitted that the best time to have taken on these problems would have been (sigh) ten years ago.

Great. No help there. And it gets even better: John Fortier of the American Enterprise Institute says that with our political situation is uncertain, with a “lame-duck president, a new Democratic majority in Congress and the 2008 presidential race up for grabs. That doesn’t bode well for tackling the problems anytime soon.

“It’s not the atmosphere to really do anything,” he said. How reassuring…but, unfortunately, this attitude is not all that surprising.

There is a pretty widely held opinion that not much is going to get done regarding these unfunded liabilities. Thomas Mann at the Brookings Institute echoes this sentiment saying, “This is a problem future presidents and Congresses will be forced to reckon with, but don’t expect any action on it in this Congress.”

 So…things aren’t looking very promising for any sort of immediate action on these issues, despite the fact that all parties involved agree that the health care system is a huge problem – and one that threatens our entire economy.

As Budget Committee member Judd Gregg puts it: “At what point does the cost of the retired generation get so high that the younger generation can no longer afford to have the quality of life that our generation had?”

The Daily Reckoning Australia

The Daily Reckoning
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Comments

  1. In addition to the costs mentioned are the interest payments on the US national debt, already close to USD$500 billion a year and rising. This is about 8 times what they spend on education.

    David Chamizo
    April 16, 2007
    Reply

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