Yesterday, the non-partisan Congressional Budget Office (CBO) released its latest Long-Term Budget Outlook and the news is grim. The preface opens,
Under current laws and policies, rapidly rising health care costs and an aging population will sharply increase federal spending for Medicare, Medicaid, and Social Security. Unless increases in revenues kept pace with escalating spending, or spending growth was sharply reduced, soaring federal debt would weigh heavily on economic output and incomes.”
Make no mistake, the pressure put on the federal budget by out of control entitlement spending is massive and unsustainable. To avoid massive tax increases or crowding out of any other spending program, entitlements must be reformed.
CBO Director Douglas Elmendorf highlighted the urgent need for this reform in his blog post on the report:
Making such changes sooner rather than later would lessen the risks that current fiscal policy poses to the economy. Although the policy choices that will be necessary are difficult, CBO’s long-term budget projections make clear that doing nothing is not an option: Legislation must ultimately be adopted that raises revenue or reduces spending or both. Moreover, delaying action simply exacerbates the challenge, as is discussed in the report.
This report should be a wake-up call to the President and Congress. Last year, a bi-partisan coalition of top policy experts outlined steps Congress should take to reform entitlements. It’s about time to follow the expert’s advice.