Editorial: $4 Trillion In Cuts Is Just A Start
http://www.investors.com/NewsAndAnalysis/Article/568095/201104041921/Ryans-Hope.htm
Posted 04/04/2011 07:21 PM ET
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Budget: Republicans are set to unveil common-sense changes to entitlements that cut spending $4 trillion over the next decade and start to restore our fiscal health. Predictably, do-nothing Democrats call them "extremist."
But who's the real extremist here? The one who recognizes that $10 trillion-plus in expected deficits over the next 10 years is a serious problem? Or those who insist there's no budget problem so bad that more spending and a massive tax hike on all Americans can't fix it?
Truth is, our long-term fiscal problem is so severe that, absent immediate corrective action, our country's political and economic future is imperiled.
By the Social Security and Medicare Trustees' own estimates, we are running headlong into a fiscal tsunami. All told, the government's entitlement accountants say, we have roughly $107 trillion in unfunded liabilities — $340,836 and change for every American alive today.
Even if you're generous and reduce that by the amount of assets the government has, the future red ink at the end of the 2010 fiscal year was still about $57 trillion — $7 trillion for federal pensions, $17 trillion for Social Security, $22 trillion for Medicare, and about $11 trillion or so in debt. That's $481,000 for every U.S. household.
For Democrats to refuse to cut spending in the face of such numbers is the definition of "extremist."
The fiscal cancer is growing fast. As the chart shows, based on estimates from the Government Accountability Office, spending on entitlements and interest on our debts will soar from just 11% of GDP this year to over half of our economy by 2065.
That means that, in that year, children born today will see 50 cents of every dollar they earn turned over to the government to pay for retirees' benefits. As intolerable as that is, today's Democrats have chosen to ignore it, screaming instead about "Wall Street" bailouts and "taxing the rich."
Unfortunately, the Democrats' panacea of higher taxes will sink the economy. Just to pay for Social Security and Medicare would require a near tripling of the current tax rate of 15.3% by the middle of the century.
Americans would be slowly bankrupted by such policies — and so would the government.
In that context, House Budget Committee chief Paul Ryan proposes $4 trillion in cuts. Extreme? Even if he cut $6 trillion, our national debt would still rise. Faced with $10 trillion in deficits, $4 trillion is just a modest start. Now we'll see who the real extremists are.
