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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: - PowerPoint PPT Presentation
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Facing America’s Long-Term Budget Challenges
Brian RiedlGrover M. Hermann Fellow for Federal Budgetary AffairsThe Heritage Foundation
Washington Now Spends $24,106 Per Household
$15,000
$17,000
$19,000
$21,000
$23,000
$25,000
1990 1992 1994 1996 1998 2000 2002 2004 2006
Fiscal Year
Infla
tion-
Adj
uste
d D
olla
rs
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
4.2% 6.0% 6.4%
3.0%
6.4%8.6%
2.8%
4.0%
1.5%
0%2%4%6%8%
10%12%14%16%18%20%
2006 2030 2050
% o
f GD
P
MedicaidMedicareSocial Security
8.7%
15.2%
19.0%
Option 1: Tax IncreasesPer Household & Translated Into Today’s GDP
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2007 2011 2015 2019 2023 2027 2031 2035 2039 2043 2047
Fiscal Year
Option 2: Other Program CutsYearly Budget Breakdown, Assuming No Tax Hikes or Budget Deficits
Social Security, Medicare, Medicaid,
and Net Interest on Earlier Debt
0%10%20%30%40%50%60%70%80%90%
100%
2006 2010 2014 2018 2022 2026 2030 2034 2038 2042Fiscal Year
% o
f Fed
eral
Bud
get
All Other Programs
Option 3: Continue Current Policies And Cover Shortfalls With Budget Deficits
OtherDefense
Social SecurityMedicaid
Medicare
Net Interest
0%
10%
20%
30%
40%
50%
60%
70%
80%
2000 2010 2020 2030 2040 2050Fiscal Year
Fede
ral S
pend
ing
as a
% o
f GD
P
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
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