The Government Accountability Office (GAO) has released yet another dire warning about the nation’s long-term fiscal condition. The report—an annual update of long-term budget simulations—projects that debt held by the public will likely exceed the historical high within 10 years.
What was once viewed by many as a distant budget imbalance has suddenly become a near-term crisis. Unfortunately, simply ignoring the issue—the action of choice for most lawmakers to date—exacerbates the problem. The GAO notes the urgency of the situation:
With the passage of time the window to address the long-term challenge narrows and the magnitude of the required changes grows. The federal government faces long-term fiscal pressures that predate the economic downturn and are driven on the spending side largely by rising health care costs and an aging population. GAO’s simulations show continually increasing levels of debt that are unsustainable over the long-term. Under [one] simulation, debt held by the public as a share of GDP would exceed the historical high reached in the aftermath of World War II by 2020.
However, this grim fiscal future is not inevitable. Recently, The Heritage Foundation released Solutions for America, a report addressing conservative solutions for 23 discrete policy areas, including 128 detailed policy solutions. Included in the report are five specific ideas to rein in out-of-control entitlement spending and return the nation to a sustainable fiscal course. The recommendations include:
- Placing entitlements on long-term budgets rather than allowing them to increase indefinitely on auto-pilot,
- Transforming Medicare into a defined contribution system,
- Transforming Medicaid from an open-ended entitlement to an insurance-based model of private coverage,
- Creating a system of voluntary personal accounts within Social Security and transforming the remainder of Social Security to “real insurance,” focusing benefits on those who really need them, and
- Encouraging increased personal retirement savings through auto-enrollment in Individual Retirement Accounts.
The nation’s fiscal situation is deteriorating by the day, and previous attempts to “bend the cost curve” have clearly failed. Common sense solutions do exist. It’s time to implement real reform.