Written by Heritage Foundation
Imagine a taxpayer bailout even larger than what's proposed for Wall Street. Now imagine it recurring every year in perpetuity. That's our fiscal future unless we fundamentally reform Medicare and Social Security. Combined, these programs expose taxpayers to $41 trillion worth of unfunded obligations over the next 75 years. According to the Congressional Budget Office , absent fundamental reform of these entitlement programs we will have to either: A) double all tax rates; B) eliminate every other federal program, including defense and education; or C) run massive budget deficits that would eventually collapse the economy. Every year of delay raises the final cost of reform by trillions of dollars.
The financial world is watching. This January the international credit rating agency Moody's said the United States is at risk of losing its top-notch triple-A credit rating. Moody's lead analyst for the U.S., Steven Hess, told the Financial Times: "The combination of the medical programmes and social security is the most important threat to the triple-A rating over the long term. If no policy changes are made, in 10 years from now we would have to look very seriously at whether the U.S. is still a triple-A credit."
Heritage senior policy analyst Brian Riedl says now is not the time to run away from the problem:
Today we are grappling with a very real financial crisis. While we cannot go back in time and fix it, we can start acting now to prevent the next, clearly visible crisis. It promises to be 60 times bigger than the Wall Street debacle. Is Congress paying attention?