Choosing the Nation's Fiscal Future (2010) / Chapter Skim
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4 Choices for a Sustainable Budget
4 Choices for a Sustainable Budget
Pages 65-74
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From page 65... ...
Options for the three major entitlement programs are treated first: Medicare and Medicaid in Chapter 5 and Social Security in Chapter 6. Spending options for defense and domestic programs other than the three big entitlements are treated in Chapter 7.
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From page 66... ...
From a budget standpoint, one of the greatest difficulties is the inability to estimate with any confidence how most of the widely discussed reform options, or combinations of them, will affect the future trajectory of health spending. Although spending increases for federal health programs are driven in part by the same demographic forces as Social Security (i.e., the aging of the U.S.
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From page 67... ...
The options the committee presents would eliminate the now-projected Social Security shortfall in different ways, showing how it is possible to preserve benefits scheduled under current law by increasing payroll taxes or what adjustments to the rate of the growth of benefits would be needed to avoid payroll tax increases. The committee's options illustrate the broad range of choices available to keep Social Security solvent without changing the fundamental nature of the program.
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From page 68... ...
A fourth option for other domestic spending suggests what could be done if spending were to grow to a level 14 percent above the study baseline. REVENUE OPTIONS Options for federal revenues depend in part on whether the nation pursues a path to sustainability that keeps spending and revenues close to their recent historical levels, as a percentage of the economy, or pursues a path with higher spending, which would require higher revenues.
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From page 69... ...
The lowest spending and revenue path would limit what government can do to provide health care, pensions, and a range of other benefits. Certainly, in that
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From page 70... ...
The low path also helps one assess whether it is both feasible and desirable to constrain the growth of Social Security benefits in the future to what can be financed with payroll taxes under current law and perhaps ask whether the options proposed or some other set are the best available
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From page 71... ...
Apart from changes to existing spending programs, it is also important to consider easy-to-imagine but hard-to-specify future demands for federal spending that could be difficult to accommodate within such a constrained budget. Intermediate Paths People who believe that the reductions from the baseline rate of spending required to hold revenues near current levels are either infeasible or unacceptable will find other scenarios more appealing.
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From page 72... ...
Such a limitation would probably require drastic restructuring of the nation's entire health care system, and it would certainly require caps on health spending, reductions in rate of growth of benefits for future Social Security recipients, and abandonment or curtailment of federal support for many other purposes. But if revenues are increased to permit faster spending growth, the federal government's claim on national resources will be far larger than ever in the nation's history, necessarily reducing the resources available for private purposes.
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From page 73... ...
NOTE 1. Because this category of domestic and defense spending rose sharply, if temporarily, as the government addressed the downturn and its consequences, 2008 may be a better benchmark for many historical and future comparisons.
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