A new book by Jagadeesh Gokhale sheds light on the magnitude of unfunded federal entitlement obligations. Gokhale compiles extensive evidence that America’s current spending path is unsustainable and that the short-term budget impact does not describe the full cost of entitlement programs:
[B]udget agencies are refusing to report implicit debts embedded in long-term entitlement programmes that will eventually involve huge resource transfers from future to current generation.… [Over the next 10 years] we will consume [an additional] $7.8 trillion of the nation’s income through extra government “benefits” that we will not “pay” for.… [T]oday’s boost to consumption spending will be reversed when future generations enter economic life and must pay higher social insurance taxes or tolerate reduced social insurance benefits to pay for the excess benefits to today’s (and past) retirees.
Gokhale and The Heritage Foundation both agree—entitlement reform is absolutely necessary to correcting our fiscal future. Gokhale puts it very simply: “Eliminating all discretionary expenditures would be insufficient…to put the US on a long-term sustainable fiscal path.” As this Heritage chart shows:
According to Heritage expert Romina Boccia, entitlements could be made sustainable through a variety of straightforward and bipartisan reforms:
These include raising the Social Security eligibility age to match increases in longevity and correcting the cost-of-living adjustment (COLA) to more accurately measure the impact of inflation on beneficiaries. In Medicare, raising the eligibility age to match Social Security makes common sense. Seniors with high incomes already pay a higher share of their own Medicare costs, and the remaining subsidy should be pared back even further.
The danger America faces is great, and Congress should act now before it is too late to avoid it. The longer Congress ignores the facts, the grimmer the financial future of America’s posterity will be. The time for entitlement reform is now.
Jacob Deveney is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.
