Official sees fiscal crisis on horizon

Lawmakers need to make the federal budget process more transparent and impose tough spending controls if the United States is going to avoid a fiscal crisis as baby boomers begin retiring next year, the comptroller general of the United States said.

“The first boomers will start retiring on Jan. 1, 2008. That will be the start of a huge drain on Social Security, Medicare and Medicaid,” said David Walker during an interview to inform businesses about the coming fiscal storm if the government doesn’t get federal entitlement spending under control as the nation’s 78 million baby boomers retire over the next 20 years.

He is one of the guest speakers at today’s “fiscal wake-up tour,” sponsored by the Las Vegas Chamber of Commerce. He will speak at noon at the Rio along with Robert Bixby, the executive director of the Concord Coalition, a grass-roots organization advocating fiscal responsibility.

Walker said the fiscal crunch is not something the government and the public can just hope will go away.

“Medicare Part A, the insurance, is already costing more than it is taking in, and Social Security will go negative in 10 years,” he said. “Many people have a false sense of security because the debt has gone down for three years.”

Walker is suggesting some preventive steps to head off the fiscal problems.

“We need to improve the transparency of the federal budget process, impose tough budget controls to stop the bleeding,” he said

He noted that congressional budget controls expired in 2002, so there is now “nothing to improve fiscal discipline” because the rules that are in place do not apply to both the Senate and the House.

Bixby conceded an unpopular topic for business leaders will be the possible fate of President Bush’s tax cuts. The tax breaks are set to expire in late 2010. Not everyone on the tour agrees that increasing taxes is the best way to meet the fiscal challenge, he said.

But something must be done, he maintained. Social Security, Medicare and Medicaid already account for 43 percent of the federal budget, and that’s even before baby boomers start retiring, Bixby said.

“Over the next 25 years, the number of people in the population age 65 and over will go from 12 percent to 20 percent, so that’s a lot of pressure on Social Security and Medicare,” he said.

Re-evaluating the eligibility rules for these programs could help ease the strain, Walker said, suggesting that raising the age of Social Security eligibility could become a possibility. Medicare recipients’ eligibility could also be more closely tied to their incomes.

“Now, 75 percent of the costs of Medicare, parts B and D, is just paid for by the general revenues. That means there is a heavy taxpayer subsidy,” he said.

Alison Acosta Fraser, the director of the Heritage Foundation’s Roe Institute for Economic Policy Studies; and Isabel Sawhill, a senior fellow on economic studies at the Brookings Institute will also speak at the meeting.