The U.S. is on pace to match that dubious distinction in under 20 years, according to the CBO, and to soar to 716 percent by 2080. Sustaining such debt would require raising marginal tax rates to as high as 88 percent, the CBO has told The Washington Examiner.
Shame on the CBO for misleading the public in this way. The experts of the CBO know perfectly well that the United States is never going to have a national debt of 716 percent of GDP or marginal tax rates of 88 percent. Long before anything like these absurd numbers were reached, policies would be changed to cut costs in medical spending. Long-term projections like these are just scary stories told to frighten the public into fiscal sobriety, in the same spirit that a parent would tell an overweight child that if she or he kept eating, then according to a straight-line computer projection, by the age of 40 she or he would weigh 23 tons.
As it happens, the CBO’s own rigorous work undercuts the apocalyptic narrative set forth by conservatives like Philip Klein. Here, from a CBO report
of a few years back (the long-term projections have not significantly changed), is Box 2, “The Effect of the Aging of the Population on Spending on Medicare and Medicaid.”
This one graph disproves practically everything American conservatives say about the alleged unaffordability of entitlements. Note that the aging of the American population alone would only raise the share of GDP spent on Medicare and Medicaid slightly between now and 2082. The projected increase is almost entirely the result of excess cost growth in America’s dysfunctional medical-industrial sector and has next to nothing to do with aging. Now look at Figure 4, “Projected Spending on Health Care as a Percentage of Gross Domestic Product.”
Observe that the cancerous growth of healthcare costs occurs chiefly in private sector healthcare spending — not in Medicare and Medicaid. In other words, the cost problem is one of the entire U.S. medical industry, private and public alike. It is not a problem caused by “entitlements.”
Debating the solutions would take us too far from the subject, although it should be noted that most other countries control healthcare costs by means of “all-payer regulation” — that is, government-imposed price controls — not by means of market competition, the right’s unrealistic panacea, which no other nation uses, for the reason that simple market economics does not work in the healthcare sector. For the purposes of this discussion, it is sufficient to reproduce a final chart from the CBO report, Figure 5, “Federal Spending for Medicare and Medicaid as a Percentage of Gross Domestic Product Under Different Assumptions About Excess Cost Growth.”
Note that if the excess cost growth problem is solved, then the nightmare scenario never materializes, either in the near future or the distant future. Indeed, in the last few years, partly because of the loss of employer-based healthcare by the unemployed, and partly because of reforms in medical provision, healthcare cost growth in the U.S. has slowed. If that trend continues, then conservatives will no longer be able to claim that healthcare in general (not just Medicare and Medicaid) will eat up half the economy in 2082. The right will have to use other arguments to discredit Social Security and Medicare, like the hoary old claim that these programs are fascist or communist — an argument that has never persuaded the growing number of American voters who depend on Social Security and Medicare for their retirements and for protecting their physical health.