The Swine Line

The Financial Times takes a look at the consequences of ignoring the explosion in entitlement program spending:

US’s triple-A credit rating ‘under threat’

The US is at risk of losing its top-notch triple-A credit rating within a decade unless it takes radical action to curb soaring healthcare and social security spending, Moody’s, the credit rating agency, said yesterday.

 …Steven Hess, Moody’s lead analyst for the US, told the Financial Times that in order to protect the country’s top rating, future administrations would have to rein in healthcare and social security costs.

“If no policy changes are made, in 10 years from now we would have to look very seriously at whether the US is still a triple-A credit,” he said.

…Last year, David Walker, comptroller general of the US, caused controversy when he compared America’s current situation with the dying days of the Roman empire and warned the country was on “a burning platform” of unsustainable policies.

Medicare and Medicaid spending, which has risen sharply over the past few decades and now accounts for about 45 per cent of total federal spending, up from about 25 per cent in 1975, has long been a source of concern.

…Most presidential candidates have vowed to reform the healthcare system but many of them, especially on the Democratic side, have focused on extending coverage to the 40m-plus uninsured Americans rather than on cutting costs

Both parties are in denial over the looming crisis that will accompany the retirement of the baby boomers.  Estimates of the long-term fiscal imbalance in entitlement programs reach $60 trillion, dwarfing the government’s “official” debt of $8.6 trillion.  Unless Congress takes action, the financial well-being of future generations will be jeopardized.  

 See Comptroller Walker’s guest column “Saving Our Future” from CAGW’s Government Waste Watch, Winter 2006