A Suggested 2013 Resolution for Washington: Entitlement Reform
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As leaders in Washington continue looking for a way to avoid the fiscal cliff, tax increases and spending cuts set to give the economy a post-New Years headache, I came upon a Heritage Foundation chart (see above) showing how in the decades ahead, entitlements (Social Security, Medicare, and Medicaid) will suck up all the oxygen in the federal budget. Economist Romina Boccia writes:
Federal spending on entitlements and interest on the debt drives the federal budget crisis. Together the three major entitlements of Social Security, Medicare, and Medicaid (including Obamacare), as well as net interest, make up more than half of all spending in the federal budget today. Their share of the budget will grow to over two-thirds of all spending in 10 years.
By 2025, the major entitlement programs and net interest together will eat up all tax revenues collected in that year. This implies that all other government spending, including for national defense, would have to be financed by borrowing.
Entitlement reform has to be tackled before it gobbles up every penny in revenue.