Debt Digest | Fiscal Irresponsibility and Medicare Insolvency
Links & Fiscal Facts
Here are this week’s reading links and fiscal facts:
Misleading debt limit deal math. The Fiscal Responsibility Act was signed into law on Saturday, June 3rd. The bill establishes statutory caps on discretionary spending for two years and includes non-binding spending limits for four more years. The Congressional Budget Office (CBO) takes these limits at face value and scores the bill as saving $1.5 trillion. As Boccia explains, “CBO scores mostly phantom savings that are unlikely to be realized…Because Congress and the White House fell short, the U.S. budget continues toward the brink of disaster as the stakes in future debt limit negotiations increase.”
Understanding the debt limit deal. The Concord Coalition unpacked the compromise bill which suspended the debt limit through January 1, 2025. “[N]either party is ready to have a serious discussion about the magnitude of the changes needed to put the budget on a sustainable path. At some point, however, members of Congress and the president will have to “stand up for seniors” by reforming—not ignoring—the demographic and financial problems that are driving Social Security and Medicare towards insolvency.” Boccia and Adam Michel explain why tax increases will be insufficient to make up for rising spending here.
Preventing Medicare insolvency. “Outside rising interest payments, three-quarters of CBO’s projected deficit increase is due to Medicare alone…The program’s projected growth as a share of GDP is driven entirely by the addition of new procedures and services to the program,” writes Chris Pope of the Manhattan Institute. Requiring Congress to ratify any new deficit-increasing billing codes for Medicare could slow the indiscriminate inflation of Medicare costs without threatening access to existing services for Medicare beneficiaries.
Work at Cato. The Cato Institute is looking for a federal welfare policy scholar. Apply here.
Visualizing out of control spending. CBO visualized the federal budget in fiscal year 2022 with 10 graphics which show how excessive spending is widening deficits. See CBO’s chart below displaying how the federal government spent $4.1 trillion in mandatory outlays of $6.3 trillion in total outlays in FY22.
