Facing America’s Long-Term Budget Challenges

Facing America’s Long-Term Budget Challenges Brian Riedl Grover M. Hermann Fellow for Federal Budgetary Affairs The Heritage Foundation

Washington Now Spends $24,106 Per Household

The Long-Term Problem • 77 Million Retiring Baby Boomers • Ratio of workers supporting each retiree: • 1960 – 5-to-1 • 2007 – 3-to-1 • 2030 – 2-to-1 • A Married Couples’ Burden in 2030 • Rising Health Care Costs • Medicaid Affected Too

Social Security, Medicare, and Medicaid Costs As a Percent of GDP

Option 1: Tax IncreasesPer Household & Translated Into Today’s GDP

Option 2: Other Program CutsYearly Budget Breakdown, Assuming No Tax Hikes or Budget Deficits

Option 3: Continue Current PoliciesAnd Cover Shortfalls With Budget Deficits

Option 4: Modernize Social Security, Medicare, and Medicaid • Reform is the only way to avoid the scenarios listed above. Delays only push up the final reform costs. • Long-Term Budgeting with Caps • Target Benefits to Needy • The Unaffordable Medicare Drug Entitlement

Conclusion • More Than Just Economics • Moral Questions of Generational Burdens and Fairness • The Burden Facing Today’s Young Workers

Facing America’s Long-Term Budget Challenges