• Look back at CBOs 2000 long term budget outlook

    Len Burman reminds us that the reality of the merging of the retirement of the baby boomers with the overall health care cost problem in the U.S. is not exactly breaking news. In the 2000 CBO long term budget outlook, CBO was urging caution about what to do with burdget surpluses (remember those!):

    The aging of the large baby-boom generation and growth in the cost of health care will dramatically increase spending for federal health and retirement programs under current law. If policymakers act to ensure that the budget remains in surplus over the near term, the resulting drop in debt held by the public and the lower interest costs that follow will help offset some portion of that increase. Preserving the full amount of the projected surpluses could substantially delay the onset of fiscal problems and help boost GDP, providing a larger base of resources from which to meet the increased demand for spending. But even if policymakers preserved all projected surpluses, spending and revenues would be unlikely to balance over the next 75 years. {emphasis mine}

    Even if all of the projected surpluses in year 2000 were reserved to offset these long term trends, an increase in taxes, decrease in benefits, or both would have been needed to totally pay for the retirement and health care needs of the baby boomers. That warning today, seems quaint.

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