10 Facts on the Fiscal Cliff, Debt, and Spending
In the previous post, we discussed, at some length, the rather serious problem we’re facing as a result of our economic situation, specifically the entitlement crisis. One of the entities that provides great data on that crisis, and on our broader economic picture, is the Heritage Foundation. Today, they bring us a useful and pithy enumeration of some of the more chilling facts with which we are faced.
We have chosen a few of the ten to highlight, but you should read them all.
- The $650 billion fiscal cliff distracted from the $48 trillion looming fiscal crisis. Much of 2012 was spent arguing over tax rates in the fiscal cliff debate while lawmakers ignored the much more dangerous looming fiscal crisis. As large and as major a concern as federal budget deficits are today, they stand in the shadow of $48 trillion in long-term unfunded obligations in Social Security and Medicare. Even with President Obama’s originally proposed tax hikes in his budget, the federal debt would still rise by more than $7.7 trillion in the next 10 years.
- Social Security ran a deficit for the second year in a row. According to the 2012 trustees report, Social Security spent $45 billion more in benefits in 2011 than it took in from its payroll tax. This deficit is in addition to a $49 billion gap in 2010 and an expected average annual gap of about $66 billion between 2012 and 2018. Social Security’s deficits will balloon yet further. After adjusting for inflation, annual deficits will reach $95 billion in 2020 and $318.7 billion in 2030 before the trust fund runs out in 2033 and a 25 percent across-the-board benefit cut occurs.
- Obamacare will spend $1.7 trillion over 10 years. After the Supreme Court decision on Obamacare, the Congressional Budget Office did an update of its scoring of the law. The result: Obamacare will spend $1.7 trillion over 10 years on its coverage expansion provisions alone, including a massive expansion of Medicaid and federal subsidies for the new health insurance exchanges. This means that Obamacare will increase federal health spending by 15 percent.
- Social Security was the biggest federal spending program. In 1993, Social Security surpassed national defense as the largest federal spending category, and it remains first today. The top five biggest spending programs, in order, are 1) Social Security; 2) national defense; 3) Medicare; 4) Medicaid, CHIP, and other government health care; and 5) interest on the debt.
- More than 40 percent of Americans are on some government program. According to Census Bureau data and Heritage Foundation calculations, 128.8 million people in America depend on a government program for basic (or not so basic) needs, such as rent, prescription drugs, and higher education.