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Thursday, June 29, 2006

Federal Budget Should Include Long-Term Obligations from Entitlement Programs

"The federal government spent $2.5 trillion in 2005: about 20 percent of gross domestic product (GDP) and 33 percent more than it spent in 2001. However, the bigger concern is that Social Security, Medicare, and Medicaid spending will explode when the baby boomers retire, doubling the total federal budget to nearly 50 percent of GDP by 2050.

Congress has no plan to pay for these promises, and the budget rules actually hide the total cost from Congress and the voters. In 2005, unfunded Social Security and Medicare obligations totaled $36 trillion. When public debt and other traditional federal liabilities are included, the total U.S. federal debt is over $46 trillion--the equivalent of a $375,000 home mortgage for every full-time worker in America, but without the house. According to the U.S. Comptroller General, this figure was only $165,000 in 2000. Yet Congress, rather than confront this growth, has chosen to compound it with the Medicare drug benefit."

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