Long-Term Budgetary Pressures and Policy Options
Abstract
The large baby boom generation will begin to retire in about 10 years, and as the demographic structure of the population changes, federal revenues will grow more slowly and outlays for Social Security, Medicare, and Medicaid will rise. Moreover, because spending per enrollee in Medicare and Medicaid is expected to climb faster than the average wage, the share of income spent on those programs will increase even without any change in demography. Because of those pressures, the Congressional Budget Office (CBO) projects that deficits will reemerge and grow in the years after 2008 unless current policies are changed. The long term deficit problem could be resolved by many combinations of spending reductions and tax increases. This report focuses on Social Security and Medicare because those programs are so large and so directly affected by the aging of the population. The approaches discussed illustrate the types of steps that could be taken to slow the growth in spending on those programs. The analysis shows how combinations of those options would reduce the size of the long term fiscal imbalance. Although it will be difficult to limit spending on entitlements for the elderly in the face of the projected increase in the number of people eligible for them, doing so will confer substantial gains on the economy.
Document Details
- Document Type
- Technical Report
- Publication Date
- May 01, 1998
- Accession Number
- ADA345952
Entities
Organizations
- Congressional Budget Office