Head off looming financial disaster
As the baby boom generation approaches retirement, David Walker, Comptroller General of the United States, has raised grave concerns about how Social Security and Medicare will be funded.
We are told that we are facing a financial crisis and that if we do not act soon to correct the course we are on, the United States will lose its leadership standing in the world and future generations will suffer a substantially diminished standard of living.
One way of bringing the scope of this crisis into a more meaningful perspective is to frame the cost of government as a percent of the Gross Domestic Product (GDP). According to the Citizen's Guide to the 2007 Financial Report of the U.S. Government, the historical level of spending by the federal government has been about 18 percent of the GDP. It went as high as 44 percent during World War II. If there is no substantial change in the entitlement programs, their combined cost, plus interest on the accumulated debt, they will exceed our current revenue stream by 2035. This would leave no funds for other government functions such as defense, homeland security, transportation and education.
By 2070, the combined cost of entitlements, interest on the debt, and all additional functions of the federal government will exceed 50 percent of GDP and by 2080 it will exceed 60 percent of GDP. This level of spending and borrowing will leave future generations facing an economic situation worse than World War II.
Such action on our part can only be considered as unconscionable. Changing this course will be difficult and will involve increasing taxes and decreasing spending. We are facing not only a financial crisis and major national security issue, but also a matter of intergenerational ethics. Unless we begin to pay our own way and stop charging current expenditures to future generations, we will properly be viewed as the most self-centered generation in history.
There is still time to change the course we are on, and changes at this point will be far less painful than changes in decades to come.
It is time to get to work.
Richard Winchell
Aurora