The president's push to tax employee healthcare benefits, as deputy editor David Katz described in the most recent blog post, is a harbinger of the political wrangling that could occur if Congress dares to follow any of the tax and federal program overhauls that David Walker, the Comptroller General, recommended today before the House of Representatives' Committee on the Budget.
During the Congressional hearing, entitled, "Why Deficits Matter," Walker warned, "We are on an imprudent and unsustainable path. Continuing on our current fiscal path would gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately even our domestic tranquility and our national security." The main drivers of America's structural deficits are increasing health care costs and our demographic trend of an aging population, Walker noted.
Walker exhorted Congress that substantive reform of Social Security and our major health programs remains critical to "recapturing future fiscal flexibility" -- now. Other programs need to be reviewed and reprioritized, he said. And, the government needs more revenues. If nothing is changed, federal taxes in 2040 may need to be raised to two times today's level.
I've heard these warnings before. Laurence Kotlikoff and Scott Burns co-authored a book, "The Coming Generational Storm," which manages to clearly explain how the U.S. is falling into a deeper hole. It also provokes thoughts of fleeing to countries that balance their budgets and provide universal health care. The book predicts that more people will be leaving the good old U.S.A. instead of entering because of its dire circumstances.
Notably, other countries have witnessed our fiscally unsustainable path and designed their systems differently. For example, China has a three-part social security system that includes contributions from the government, the individual's savings, and private insurance plans (all parts are mandatory).
I seriously wonder what will happen to the U.S. in the future. Meanwhile, I'll hold onto my E.U. passport.
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