Monday, August 22, 2011

Entitlements

It could probably be shown by facts and figures that there is no distinctly native American criminal class except Congress.
- Mark Twain
Today I'll let a picture say its thousand words,


Bottom Line

Remember when Social Security was going to crash the government budget? With more seniors there will be higher payments out. The expense will rise from about 4% of Gross Domestic Product to 6 or 7%. Where is that money going to come from?

But it turns out that Social Security is just a drop in the bucket compared to Heath Care which was just 1% in 1970 and today is equal to Social Security. Look at the projected rate of climb on health care. The Obamacare bill was supposed to "bend the cost curve" so that health care would not grow so fast. It failed at that.

Keep in mind that the GDP itself is growing at 1 to 2% each year (3% in really good years). For the SS and health care to become a larger percentage of the GDP means that they are growing at an even faster rate than the economy as a whole. The GDP today is about 14 trillion dollars so each percentage point in the graph represents 140 billion dollars. That may sound "small" compared to the total but consider this: the 2 trillion dollars "cut" from spending over ten years in the recent debt cap bill comes to about 200 billion saved per year. It took a near collapse of the government to reach an agreement to cut just 200 billion a year. What will be cut in the future to pay for health care?

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