The Washington Post continued its practice of placing editorials on the front page, telling readers today about the need to defuse "the spending time bomb for health and retirement programs." Of course this time bomb is entirely an invention of the Post. There is nothing that resembles a time bomb in the case of Social Security. The Congressional Budget Office (CBO) projects that the program can pay all scheduled benefits for the next 40 years with no changes whatsoever. Even after the program is first projected to face a shortfall in 2049, CBO projects that it would always be able to pay retirees a higher benefit than current retirees receive. (The downward redistribution of income, which may be an outcome of the current crisis, will improve the funding of the program.) Medicare is projected to face serious shortfalls, but this is due to the projected explosion of health care costs in the United States. If the United States can repair its health care system, as President Obama has pledged to do, then Medicare costs would also be manageable. The article also includes a chart of projected deficits, measured in the hundreds of billions of dollars. This is presumably intended to scare readers into supporting the Post's position on the budget deficit. If the deficits were expressed as a share of GDP, there would be close to 3 percent of GDP by the end of the 10-year budget horizon. If the Bush tax cuts for high income earners are allowed to expire, as President Obama has proposed, the deficits would be under 3 percent of GDP. Deficits of this size are probably somewhat higher than most analysts would considerable desirable, but they are far from disastrous.
--Dean Baker