Entitlements gone wild: it may well be politically convenient to continue ducking entitlement reform, but doing so will condemn our children and grandchildren to a world of mounting debt and higher taxes.

• Author: Tanner, Michael
• Position: The Federal Budget

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NO ONE SHOULD be shocked to learn that government spending is out of control. The Bush and Obama presidencies have been the two most profligate political eras of modern times. Federal government spending nearly has doubled over the last 10 years. As a result, we now face budget deficits that are unprecedented in the post-World War II era. Yet, our current budget problems are nothing compared to the explosion to come. The Congressional Budget Office predicts that the official debt alone (excluding the unfunded liabilities of entitlement programs) will exceed 100% of gross domestic product by 2025 and could exceed 180% of GDP by 2035. From there, it only gets worse.

No area of government spending has been immune from this explosion. Since 2000, domestic discretionary spending has increased by 120%, and defense spending has risen by 135%. Both will have to be reduced it" we are to begin putting our fiscal house in order.

The vast majority of future debt is driven neither by defense nor discretionary initiatives, but by so-called entitlement programs, three in particular: Social Security, Medicare, and Medicaid. By 2050, those alone are expected to consume every penny that the Federal government raises in taxes. That means that everything else that the government does, from domestic programs to national defense, including paying interest on the Federal debt, will have to be paid for through still more debt, or else government will have to raise taxes to astronomical levels.

As the full burden of entitlement programs kicks in, the Federal government will consume more than 40% of GDP by the middle of the century. Again, half of that will be for Social Security, Medicare, and Medicaid. It is not as though there has been no warning about entitlement growth. As far back as 1995, the Bipartisan Commission on Entitlement and Tax Reform was pointing out: "If we do not plan for the future, entitlement spending promises will exceed Federal resources in the next century. The current trend is unsustainable." The commissioners went on to warn, "If we fail to act, we have made a choice that threatens the economic future of our children and the nation." Four years later, the National Bipartisan Commission on the Future of Medicare, while unable to reach a consensus on how to reform the program, concluded that it was unsustainable in its present form. Likewise, Pres. Bill Clinton's Social Security Advisory Council agreed that Social Security, as currently structured, could not meet its future obligations.

Economists inside and outside government have made it clear that entitlement reform was essential to the nation's long-term fiscal health. Most recently, in December 2010, the bipartisan National Commission on Fiscal Responsibility and Reform warned that we have reached a "moment of math" for budget reform.

If anything, these warnings--over many years and across political and ideological differences--have understated the threat to future generations. So far, though, both parties have sought partisan political advantage rather than dealing with the looming threat. Democrats demagogued Pres. George W. Bush's attempts to reform Social Security and continue to attack any Republican who raises the issue. Republicans criticized Democrats for daring to make cuts, however tentative, in Medicare as part of their health care reform effort. That must change.

Unless the U.S. learns to live within its means, a true economic disaster beckons. That translates into Congress having to cut spending at all levels. Both discretionary and defense spending will have to be scrutinized and pared back to affordable--as well as constitutional--levels. Even more important, Congress finally must enact entitlement reform, and that reform has to go beyond mere tinkering; it must restructure the programs in fundamental ways.

Our looming fiscal train wreck has been amply abetted by both political parties, but the 2010 midterm elections demonstrated that voters see the debt as a major issue. In fact, polls show that the public puts a high priority on deficit reduction (although there is much disagreement on how to accomplish that goal).

In Fiscal Year 2011, the Federal government will spend 1.65 trillion dollars more than it takes in. While a slight ($119,000,000,000) improvement over 2009, this still represents the second largest budget deficit in the last 65 years, and the Obama Administration projects that, in 2012, the deficit will improve, but still top 1.1 trillion dollars. Some observers have claimed that recent deficits have been the result of the Bush tax cuts combined with the cost of the wars in Iraq and Afghanistan. Certainly fighting two wars has been expensive, costing more than 1.1 trillion dollars since 2001 by some estimates. However, with the possible exception of 2007, the cost of the wars represents only a small fraction of the deficits.

The impact of the Bush tax cuts is a bit more complicated since one has to account for their dynamic impact on economic...