Deficit projections are pretty worthless. At the beginning of 2007 the Congressional Budget Office, which has an inflated reputation but is at least nonpartisan, projected the federal deficit for fiscal 2010 at $333 billion (it will be at least four times that)—and that was a short-term projection. In 2001 it had predicted a 10-year budget surplus of more than $3 trillion. Its forecasts are largely just extrapolations, which assume that the future will be just like the past. All that can be said about future deficits with an approach to confidence is that if nothing is done they will grow, and that nothing is likely to be done until they grow to a point at which there is a palpable impact on the standard of living.
In 1983, Congress amended the social security act to provide that, for people born in 1938, the age of eligibility for full social security benefits would rise gradually from 65 to 67. (Hence the first effects of the reform were not felt until 2003, when people born in 1938 reached the age of 65, and the full effect will not be felt until 2026, when people born in 1959 reach 67—it is the deferral of the hurt that made the program politically feasible.) It is a sad commentary on our political system that there is no movement today for a similar reform, which would raise the future age of entitlement to full social security benefits to 70 in recognition of continuing increases in longevity, health, and income. We are in ostrich mode so far as dealing with our fiscal problems is concerned, even though the problems are far more serious than they were in 1983.
The basic problem is that our two political parties, although they pretend to be ideologically opposed and certainly do disagree on a number of details of public policy (many of which however are economically inconsequential), are agreed on the basics of fiscal policy: that taxes are bad and government spending is good. The Democrats used to believe that since spending was good, taxes had to be heavy, and Republicans that since taxes are bad, spending had to be limited so that taxes could be low. Eventually the parties discovered from election results that taxes are unpopular and spending popular, so Democrats stopped pushing for higher taxes (except on very high earners) and Republicans for lower spending. Both parties have embraced fiscal irresponsibility.
I couldn't agree more. These basic points are the essence of any conversation regarding politics I've had for the last few years, since having been (I believe) politically awakened, and the reason I'm entirely dissatisfied with both of the self-interested political parties running this country. It's becoming increasingly apparent how entirely incapable our government is at making difficult yet necessary decisions, and, for that matter, how fearful and selfish each of us is when it comes to making personal sacrifice. Obama is no savior, and it's delusional to think otherwise. In fact, he's going down the same doomed road as Bush, and each of them, in conjunction with our poor excuse for a Congress, and in collusion with our misdirected and misdirecting media, has been hauling us as "the people" with them, whether we like it or not. As we spend our time complaining about different government prescriptions for our cough, our lung cancer is being utterly ignored. We're sacrificing the future for today's creature comforts.
While it's true that it might not be such a bad thing to live with less, it would be a much better thing to live with less by choice rather than compulsion when we finally reach the coming precipice.