Providing healthcare services and retirement benefits to the nation’s enormous baby boomer population will place a huge burden upon the economy, says the Congressional Budget Office in its 2012 Long-Term Budget Outlook.
“The aging of the baby-boom generation portends a significant and sustained increase in the share of the population receiving benefits from Social Security, Medicare, and long-term care services financed by Medicaid,” writes the CBO.
Although the CBO analyzed two scenarios spanning a wide range of possible policy choices, neither represents what the agency predicts policies will actually be during the next several decades. Either way, whichever scenario (or version thereof) ends up in place, the nation’s debt profile is going to get real ugly.
Federal debt will take up a whopping 70% of the nation’s gross domestic product (GDP) by the end of this year alone. Under what the CBO terms the “alternative fiscal scenario,” debt would reach nearly 200% of the GDP in 2037 as revenues remain at similar levels on a historical basis, while spending grows because of aging and rising health care costs.
“The explosive path of federal debt under the alternative fiscal scenario—which maintains what might be deemed current policies—underscores the need for large and timely policy changes to put the federal government on a sustainable course,” says the CBO.
If current laws and policy provisions remain in place or in plans for implementation, spending on the major federal health care programs alone will nearly double as a percentage of the nation’s GDP by 2037 and will continue to increase.
View the 2012 Long-Term Budget Outlook.
Written by Alyssa Gerace