While chatting with a colleague today about the new CBO long-term budget outlook, we agreed there wasn’t much new there, but then he said something that stuck with me:
Of course, it shows that we can afford the entitlements.
To hear everyone from the WaPo editorial page to Bowles/Simpson to all the R’s and many of the D’s, there’s an entitlement crunch, crisis, death spiral, or whatever…waiting for us out there in the future if we fail to muster the steely-eyed courage to face it.... cutting benefits, privatizing, voucherizing, raising the retirement age, means testing…basically, fixing them by breaking them....
Under that [current law] scenario, which in fact happens to be current law (meaning all the Bush tax cuts expire, for example), debt stabilizes as a share of the economy in a few years and then starts down a slow glide path. And Medicare, Medicaid, and Social Security as we know them today are all in that bottom line.... [T]axes go up and spending is restrained.... Some of the assumptions—like we allow Medicare payments to doctors to fall sharply or all the tax cuts permanently expire next Jan—are wholly unrealistic. But there are unrealistic assumptions under the other scenario too.... [T]here’s no reason why something like that bottom line’s baseline couldn’t prevail.... [A]side from dysfunctional politics feeding a largely misleading public debate, we could do this. If we, as a nation, decide that we want to achieve fiscal sustainability and preserve the entitlement programs, along with gov’t’s other critical functions, it is well within our means to do so.
So sayeth the CBO.
So say we all!