U.S. Senator Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, today issued the following statement on CBO’s new report entitled, “The 2014 Long-Term Budget Outlook,” which details how spending for Social Security and health care entitlements will cause deficits to rise over time.
“Today’s CBO report is a stark reminder of the urgent need for entitlement reform, because as CBO says, our current spending path is unsustainable,” Hatch said. “It is my hope our friends on the other side of the aisle will abandon their misguided political opposition and heed this dire warning to work together to reform and strengthen the entitlement programs for our seniors and future generations. The time for courage is now.”
Findings of the CBO report include:
High and Unsustainable Debt: Federal debt held by the public is on a course to exceed 100 percent of the size of our economy (the “gross domestic product,” or GDP) and on an unsustainable long-term trajectory.
Large Increase in Spending: Federal spending, under current law, is set to increase to 26 percent of the size of our economy by 2029, compared to 21 percent in 2015 and an average of 20.5 percent over the past 40 years.
Runaway Entitlements Drive Spending Growth: Federal spending for Social Security and the government’s major health care programs—Medicare, Medicaid, the Children’s Health Insurance Program, and subsidies for health insurance purchased through the exchanges created by the Affordable Care Act—will “…rise sharply, to a total of 14 percent of the size of our economy by 2039, twice the 7 percent average seen over the past 40 years.”
Runaway Entitlements Will Increasingly Choke Off Discretionary Spending: CBO’s data show the dire consequences of that runaway entitlement spending. According to CBO: “…total spending on everything other than Social Security, the major health care programs, and net interest payments would decline to 7 percent of GDP by 2039—well below the 11 percent average of the past 40 years and a smaller share of the economy than at any time since the late 1930s.” This means that runaway entitlements are choking off the federal government’s financial ability to fund infrastructure, education, defense, and a host of other “discretionary” spending programs.
Revenues Scheduled to Rise Above Historic Norms: Federal revenues would increase to 19½ percent of GDP [under current law], compared to an average of 17½ percent over the past four decades.
We Have a Spending Problem, Not a Revenue Problem: CBO’s message is clear: Continuing on our current path, driven by unsustainable, runaway entitlements, federal spending rises sharply to outpace revenues, which themselves will rise well above the historic norm, driving our deficits and debt ever upward.