GAO chief warns of staggering fiscal challenges
General Accounting Office Comptroller General David Walker found a small but receptive audience at the Senate Budget Committee Wednesday when he delivered a sobering assessment of the staggering long-term fiscal challenges the federal budget faces.
"Absent substantive reform of the entitlement programs, a rapid escalation of federal spending for Social Security, Medicare and Medicaid beginning less than 10 years from now is virtually certain to overwhelm the rest of the federal budget," Walker testified.
Both the Social Security and Medicare trust funds are projected to run cash flow deficits beginning in 2016, according to the agency. Social Security trust funds are projected to remain solvent through 2038, while the Medicare Part A fund will be exhausted after 2029.
Under a projection based on CBO's current services baseline and assuming that discretionary spending grows with the economy and that last year's tax cuts are extended, Walker cautioned that by 2030, federal taxes would have to be raised by 25 percent or discretionary spending would have to be cut by two-thirds to meet the current obligations of the Social Security, Medicare and Medicaid programs.
By 2050, he said, the federal government would only have enough money after meeting those obligations to make its interest payments on the national debt, with nothing left over for discretionary programs absent a 100 percent tax increase.
Describing the coming fiscal shortfall in another way, Walker told the committee that the outstanding liability of the Social Security trust funds-the bill that will begin coming due when the Baby Boom generation begins to retire-amounts to $3.8 trillion, while the Medicare Part A trust fundfaces a $2.7 trillion liability.
"The situation is so serious," Walker warned, "you're not going to grow your way out of this problem."
Budget Committee Chairman Kent Conrad, D-N.D., who will soon have to write his first budget as chairman, concurred with Walker's assessment, saying "There's a train wreck coming and it's of enormous proportion. And we'd better wake up and deal with it."
Meanwhile, President Bush today pledged to resist an anticipated congressional effort to reduce spending.
"One area on which I'm going to hold the line on the budget, though, is on [Temporary Assistance to Needy Families] funds," said Bush during a welfare-to-work event in Charlotte, North Carolina.
Bush Tuesday proposed to maintain the TANF program at its current $16.6 billion level. "There's going to be some in Congress who say we've got to reduce the TANF monies-welfare monies-because the caseloads have dropped," Bush said, but indicated he would not agree to such a move.
But Bush in a separate appearance also called for fiscal discipline, demanding that Congress fund his proposed increases for defense, homeland security and education and then "hold the line on everything else and we'll be just fine."