This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

How To Fix US Debt Without Hurting Fragile Economy

â¿¿ TARGET ENTITLEMENT PROGRAMS

The most serious threat to the federal government's finances is America's aging population. As baby boomers have begun to shuffle into retirement, they are tapping Medicare health care benefits and collecting Social Security.

The CBO sees federal deficits falling through 2015 as the economy improves and the automatic budget cuts reduce spending. But then the deficits start rising again inexorably because of higher health care spending and rising interest payments on the federal debt. The debt will near $20 billion by 2030 if nothing is done, according to the CBO.

Many Democrats have resisted efforts to slow the growth of Medicare and Social Security. Economists say Democrats will have to accept the reality that the government can't keep spending at its current pace indefinitely.

America spent more than $8,200 per person on health care in 2010. That's the most of any country and more than 50 percent higher than No. 2 Norway's $5,388 per person.

The automatic spending cuts largely leave health care and Social Security spending alone. Instead, they zero in on the rest of the federal budget â¿¿ so-called discretionary programs â¿¿ including defense spending. But the 2011 budget agreement already took an ax to discretionary programs. The White House says they are already scheduled to fall to 5.7 percent of U.S. GDP by 2017 â¿¿ the lowest level in budget records dating back to 1962. Discretionary spending accounted for nearly 37 percent of the $3.8 trillion the federal government spent last year; so-called mandatory programs, including Social Security and Medicare, accounted for 61 percent.

"By far the preferable policy," Macroeconomic Advisers says, "is a credible long-term plan to shrink the deficit more slowly through some combination of revenue increases within broad tax reform, more carefully considered cuts in discretionary spending, and fundamental reform of entitlement programs."

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
4 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG

Markets

Chart of I:DJI
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 +1.21 0.06%
NASDAQ 4,828.3250 +15.6170 0.32%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs