Newspaper article St Louis Post-Dispatch (MO)

Budget Deal Ignores Long-Term Impact of Senior Boom

Newspaper article St Louis Post-Dispatch (MO)

Budget Deal Ignores Long-Term Impact of Senior Boom

Article excerpt

For the past week, Washington has been indulging in a well-deserved round of self-congratulation over passage of the first balanced budget in three decades. After 10 years of failed deficit-reduction efforts, the bill passed last week and signed Tuesday by President Bill Clinton stands out as a significant bipartisan accomplishment.

So why are we applauding with only one hand?

While the new balanced budget is a short-run fiscal encouragement, it fails to address the much tougher challenge waiting for us in only a decade, when the oldest members of the baby-boom generation begin signing up for Social Security, in 2008, and Medicare, in 2011.

Unless we tackle this huge problem, all of the hard work to balance the budget in 2002 will be washed away in a sea of red ink.

The numbers are relentless. Today, the United States has about 24 million retirees. When the boomer generation is fully retired, the figure will be 48 million.

But the number of working-age citizens, whose payroll taxes finance m ost of the seniors' Social Security and Medicare benefits, will increase only 20 percent in that period. And Medicare spending per beneficiary will have continued to rise.

Well, if the balanced budget neglects the country's long-term generational challenge, how does it do in the short term?

The economy and the private sector are performing so well that revenue is pouring into the Treasury faster than politicians can claim credit for reducing the deficit. But the assumptions in the balanced budget plan mean the economy must continue performing at a strong pace.

Congress, of course, can't repeal the business cycle, and the plan leaves no reserve for error.

To reach balance also requires that future Congresses and the next president live up to tough limits on discretionary spending. These ceilings have provided spending discipline for a decade.

The new plan conveniently allows a $7 billion boost in the current round of appropriations bills, but the limits tighten dramatically after that. …

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