This picture is actually a little bit out of date– the situation is worse now. But the idea is still the same. The black line is revenues, the red area Social Security spending, the green area Medicare/Medicaid spending and the blue area is all other spending (including military).
I saw a talk recently by the trustees of Social Security (one Republican, one Democrat… newly filled posts that had been vacant for two fricking years because the Republicans keep blocking appointments). If we don’t do something, then when the SS trust fund empties in a few years, either we’ll have to cut benefits by 23% across the board, including to people currently receiving benefits, or we will have to raise taxes across the board by 16% (my colleague tells me this is equivalent to 1.6 ppt). And that’s just the red area. Check out the green area of Medicare/Medicaid. Sorry Huffington Post columns… we do kind of have to cut that down. Let’s try to do it responsibly.
Can we just cut spending? NO.
Can we just raise taxes? NO.
A combination of both, phased in as the economy recovers (but NOT until the economy recovers and unemployment is back down!) will put us back on track.
Write to your congresspeople, especially if they’re tea partiers. Tell them that government has GOT to compromise. That spending cuts aren’t enough and they’ll put us in a double dip recession. That Republicans and Democrats need to come together and vote for something like the gang of six plan, (or, in my ideal world, a more liberal version of it). We need long-term stability for our country. We need short-term stimulus for our nation.
There’s a range of viable solutions that gets smaller and smaller as time goes on. We had a lot more options for solving these problems back in 2000 than we do now. If we keep waiting, that range of options will continue to get smaller and cuts or tax increases (or inflation) will have to be larger.
I’m not tagging this deliberately controversial because well, I have a PhD in this stuff and it really isn’t controversial among anybody who moves in economics or policy circles, no matter their party affiliation. Just among politicians and folks who watch or read too much partisan media (Krugman also representing partisan media– although he must know better). The people who really know economics or government or history know what needs to be done. I wish we were better at getting the message out to everybody else. I hope this graph, that has convinced so many policy makers, convinces a few other folks too.