Trying to stoke fears that the middle class in America is dying, progressives recently have taken to distributing a chart showing household debt rising steadily over the past fifty years. The Atlantic’s Megan McArdle has been doing a fine job putting these worries in perspective. But a front page story in today’s USA Today adds reminds where the real threat to middle class finances comes from:
Taxpayers are on the hook for a record $57.3 trillion in federal liabilities to cover the lifetime benefits of everyone eligible for Medicare, Social Security and other government programs, a USA TODAY analysis found. That’s nearly $500,000 per household.
When obligations of state and local governments are added, the total rises to $61.7 trillion, or $531,472 per household. That is more than four times what Americans owe in personal debt such as mortgages.
Earlier this year, 16 federal budget experts from a bi-partisan group of seven think tanks (including: American Enterprise Institute, Brookings Institution, Concord Coalition, Heritage Foundation, New America Foundation, Progressive Policy Institute, and Urban Institute) addressed this problem in a report calling for major reform of our entitlement spending including:
- The three major entitlement programs should be converted into regular “discretionary” programs that compete on a level playing field with such programs as defense, rather than pre-empting funds for these programs or automatically running up long-term deficits.
- Congress and the President should enact long-term budgets for Social Security, Medicare, and Medicaid and be required to review them every five years. The rules for the five-year review must include a trigger or action-forcing device that automatically make changes when projected spending exceeds budgeted amounts.
- The long-run costs of these three programs should be made visible in the budget at all times and considered when decisions are made.