- David Walker, Comptroller General at the Government Accountability
Office, appeared on the show "60 Minutes" last evening to discuss
the federal budget outlook. If you saw the show, you know that he painted
a very sobering picture regarding the federal government's ability to meet
its future obligations.
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- If you didn't see the show, Mr. Walker's theme was simple:
government entitlement spending is like a runaway freight train headed
straight at American taxpayers. He singled out the Medicare prescription
drug bill, passed by Congress at the end of 2003, as "probably the
most fiscally irresponsible piece of legislation since the 1960s."
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- When it comes to Social Security and Medicare, the federal
government simply won't be able to keep its promises in the future. That
is the reality every American should get used to, despite the grand promises
of Washington reformers. Our entitlement system can't be reformed- it's
too late. And the Medicare prescription drug bill is the final nail in
the coffin.
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- The financial impact of the drug bill cannot be overstated.
Government projections that the program would cost $400 billion over the
next decade were a joke, as everyone in Congress knew even as they voted
for the bill. The real cost will be at least $1 trillion in the first
decade alone, and much more in following decades as the American population
grows older.
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- The Medicare "trust fund" is already badly
in the red, and the only solution will be a dramatic increase in payroll
taxes for younger workers. The National Taxpayers Union reports that Medicare
will consume nearly 40% of the nation's GDP after several decades because
of the new drug benefit. That's not 40% of federal revenues, or 40% of
federal spending, but rather 40 % of the nation's entire private sector
output!
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- The politicians who get reelected by passing such incredibly
shortsighted legislation will never have to answer to future generations
saddled with huge federal deficits. Those generations are the real victims,
as they cannot object to the debts being incurred today in their names.
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- The official national debt figure, now approaching $9
trillion, reflects only what the federal government owes in current debts
on money already borrowed. It does not reflect what the federal government
has promised to pay millions of Americans in entitlement benefits down
the road. Those future obligations put our real debt figure at roughly
fifty trillion dollars- a staggering sum that is about as large as the
total household net worth of the entire United States. Your share of this
fifty trillion amounts to about $175,000.
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- Don't believe for a second that we can grow our way out
of the problem through a prosperous economy that yields higher future tax
revenues. If present trends continue, by 2040 the entire federal budget
will be consumed by Social Security and Medicare alone. The only options
for balancing the budget would be cutting total federal spending by about
60%, or doubling federal taxes. To close the long-term entitlement gap,
the U.S. economy would have to grow by double digits every year for the
next 75 years.
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- The answer to these critical financial realities is simple,
but not easy: We must rethink the very role of government in our society.
Anything less, any tinkering or "reform," won't cut it. A good
start would be for Congress to repeal the Medicare prescription drug bill.
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- http://www.house.gov/paul/tst/tst2007/tst030507.htm
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