While Washington, D.C., was digging out of nearly two feet of snow from winter storm Jonas last week, another kind of storm was unveiled to the American public: the federal budget outlook for the next ten years. The report, issued by the nonpartisan Congressional Budget Office (CBO), forecasts a grim future for our country if we don’t begin to act now to rein in spending and address our country’s $18 trillion debt.
The report painted a picture of our economic outlook that is even worse than previously predicted. Deficits are projected to be more than 20 percent greater than the CBO previously calculated due to slower-than-expected economic growth. Additionally, the report confirmed that the federal government is headed toward record-breaking deficits in the next ten years, largely due to entitlement spending on programs such as Medicare, Medicaid and Obamacare.
Even more alarming: in 10 years, the cost of entitlement programs and interest on our debt will amount to 99 percent of all revenue coming into the federal government. That will leave little room to adequately fund other important programs such as education, national defense, transportation and medical research. This should be a wake-up call to all of us.
What happens if we fail to act? According to analysis done by the Joint Economic Committee, over time, our rising debt will prevent capital formation. Without savings, we lack the ability to invest in new technologies, which hinders productivity and bogs down the entire economy. The sooner we begin to address these issues, the easier it will be to fix them.
While it will take time to get out of this mess, there are tangible steps we can take to begin to reduce our debt. We must first and foremost address entitlement spending. We have to save Medicare, reform Social Security so it is sustainable, make systematic changes to the Medicaid program and repeal the Affordable Care Act before it crumbles under its own weight. This is confirmed by the CBO report, which found that next year alone, spending on Medicare, Medicaid, subsidies for health insurance purchased through Obamacare and the Children’s Health Insurance Program will be 11 percent greater than they were just last year – an unsustainable path.
In addition to reforming entitlements, we must also adopt pro-growth policies that will allow the economy to expand. This will lead to increased job opportunities, higher wages and greater profits that can be reinvested, which will result in more revenue to help reduce our debt. This can be achieved by reducing burdensome regulations and reforming the tax code so families and business owners can adequately plan for the future. This is why I continue to work on a number of measures to reform the regulatory process.
In order to turn our fiscal house around, it will require everyone in Washington to make tough decisions that aren’t always popular. But as the latest CBO report confirms – doing nothing is not an option.