Top fiscal watchdog: “we haven’t remotely fixed the debt problem”
The Hill reports on an analysis by the highly prominent Peter G. Peterson Foundation on the so-called “American Taxpayer Relief Act of 2012,” a.k.a., the fiscal cliff bill:
The “fiscal cliff” deal, combined with the debt-limit agreement of August 2011, only slightly delays the United States reaching debt-to-gross domestic product levels that would damage the economy and risk another fiscal crisis, according to a report from the Peter G. Peterson Foundation released on Tuesday.
The agreement “may have prevented the immediate threats that the fiscal cliff posed to our fragile economic recovery, but we haven’t remotely fixed the nation’s debt problem,” said Michael A. Peterson, president and COO of the Peterson Foundation.
“The primary goal of any sustainable fiscal policy is to stabilize the debt as a share of the economy and put it on a downward path, and yet our nation is still heading toward debt levels of 200 percent of GDP and beyond,” he said.
The report concludes that the recent round of deficit-reduction measures won’t make major improvements because they fail to address most of the major contributors to the debt and deficit. . . .
The executive summary of the report makes clear on what these factors are:
The reason why the debt picture has not materially improved is that spending on health care entitlements, Social Security, and interest costs are still projected to rise faster than revenues, leading to widening deficits and growth in federal debt. Until spending in those areas is reduced, tax revenues are increased, or we implement a combination of both, the United States will continue to have a severe long-term debt problem. It’s simple math: the rapidly aging and longer living baby boomers represent very predictable and fast growing financial costs for the federal government, and existing fiscal policies are not sufficient to sustain these important programs.