Doom Averted

It looks as if there will not be economic doom, at least not today. The passage of the debt ceiling bill Tuesday, while staving off immediate problems, hasn’t solved any of the big financial problems that the nation faces. The bill, from what I have heard it makes some cuts to spending with no new sources of revenue, either through raised taxes or loophole closures. Yet that isn’t the big problem, as I understand it the two largest problems facing the finical future of the federal government are Medicare/Medicaid and Social Security. Let’s look at the first of these, the Congressional Budget Office (CBO) estimates that Medicare/Medicaid costs will continue to raise in the future, with expenditures out pacing revenues by over four percent in the next fifty years. This is problematic since people are living longer so they are drawing from the program for more years than anticipated. Then you have Social Security which will be paying more than it is taking in from the range of half a percent to three percent over the next fifty years. Social Security also has the problem of people living longer than expected and still drawing from the federal coffers. The CBO went has detailed reports on both issues so if you interested check out its website. It is more than a little disconcerting that these programs are spending more than they are taking in, and while it is just a few percentage points the costs are in the billions.

The question is then what do we do, we could stop paying into these programs but then we are pulling money from the elderly and the poor sick, neither of which can hardly afford a cut back. The congress could cut spending in other areas to make up for the short fall, but given the ever increasing rate of healthcare costs we would have to cut more and more from other programs. The congress could alter the parameters to how one could qualify for either programs; i.e. rising the Social Security age or altering the qualifications to get Medicare/Medicaid. We could start to phase out the programs but then were back at our first option of telling the elderly and poor sick “sorry you can’t afford your healthcare but we don’t have the money either”. Lastly, we could raise revenues to make up for the increasing costs, but that seems to be as popular as a punch to the face. Whatever we decide it will have to be big and probably make some people upset, but without doing something we are just postponing our financial doom.