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Editor's Notes

1. When we approach the issue of cutting spending, it is important to realize exactly how much the government spends, and what it spends it on. Last year, the federal government spent $3.5 trillion dollars.?Non-defense discretionary spending ¨C the category that covers most domestic federal agencies ¨C took up roughly 20 percent of the federal budget. And Defense spending took up another 20 percent.?The majority of government spending goes toward entitlement programs such as Social Security, Medicare, and Medicaid. ¡°Mandatory¡± is a budget term ¨C meaning that the annual appropriations process doesn¡¯t have discretion over the levels of spending. If you qualify for a benefit under these programs, the government is legally required to spend the money. Clearly, we need to address this growing size of the pie.
2. Let¡¯s look at the consequences of years of unsustainable spending increases, and years of ignoring the drivers of our debt.?We¡¯ve had high levels of debt before ¨C mostly due to increases in the size of government to address moments of crisis. For example, to fight World War II, our debt reached 100% of our economy, but we were able to borrow such a large amount ¨C mostly from our own citizens I might add ¨C because it was clear that the spending was temporary, and indeed spending came down, the economy grew and our debt returned to sustainable levels. ?Today, we face a structural problem. In three decades ¨C our debt will grow to more than three times the size of our entire economy.This trajectory is catastrophic. There is no way our economy can sustain this explosive growth of government.
3. There is an alarming cost to kicking the can down the road on these problems. Each year we wait, the problems grow larger, and the available solutions more difficult.The government¡¯s unfunded liabilities ¨C which just means the promises we are making to current workers about the retirement benefits they will receive, but which we have no way to pay for ¨C are projected to grow by trillions of dollars in every year that we fail to act. ?Right now, government programs ¨C with their unsustainable structure ¨C too often represent empty promises to our citizens. Social Security¡¯s annual cash deficits are now permanent. Medicare¡¯s unpaid promises are in the tens of trillions of dollars. Unless we modernize the structure of our health and retirement benefit programs for the 21st century, the bankruptcy of these programs will break promises to current seniors and deprive younger workers of the security they¡¯re counting on and the future they deserve. ?By putting in place gradual, modest reforms, we can ensure that those in and near retirement are safe from any disruptions, while future generations have a safety net with real security they can continue to count on.