Qdrop
03-10-2005, 11:10 AM
http://today.reuters.com/news/newsArticle.aspx?type=politicsNews&storyID=2005-03-09T225207Z_01_N09285739_RTRIDST_0_POLITICS-CONGRESS-DEFICITS-DC.XML
Taxes May Barely Cover Future Interest -Agency
By Donna Smith
WASHINGTON (Reuters) - U.S. tax revenues may barely cover interest payments on the federal debt if current deficit-producing tax and spending policies are maintained, the top government policy watchdog warned on Wednesday.
"We could be doing nothing more than paying interest on the debt in 2040," Government Accountability Office Comptroller General David Walker warned federal lawmakers.
In testimony to the House of Representatives Ways and Means Committee, Walker said that scenario assumes President Bush's tax cuts are made permanent and spending for programs other than for health care and retirement grow with the economy.
Bush wants to make his tax cuts permanent, but even if they expire as scheduled in 2010, the country faces daunting budgetary pressures, Walker said.
Medicare and Medicaid health care programs for the elderly and poor, coupled with growing demands on the Social Security retirement program as the population ages, will dominate the federal budget, he said.
"Absent meaningful changes to these programs, the nation will ultimately have to choose among persistent, escalating federal deficits, huge tax increases, and/or dramatic budget cuts," he said.
Social Security was not now facing a crisis, Walker said, but it would be prudent to act sooner rather than later, and to address more-immediate problems facing Medicare and Medicaid.
Bush has raised the specter of bankruptcy for the Social Security system and aggressively promoted an overhaul with private investment accounts as a centerpiece.
But private accounts alone do not address Social Security's financial problems and would speed up its cash-flow problems, Walker said.
Walker suggested that lawmakers consider allowing the Social Security trust fund to sell its holdings of U.S. bonds on the open market.
That would allow the program more flexibility to manage its assets and raise money, but it would not be issuing its own bonds. The bonds are the only asset the trust fund holds and currently they can be redeemed only through the U.S. Treasury.
Taxes May Barely Cover Future Interest -Agency
By Donna Smith
WASHINGTON (Reuters) - U.S. tax revenues may barely cover interest payments on the federal debt if current deficit-producing tax and spending policies are maintained, the top government policy watchdog warned on Wednesday.
"We could be doing nothing more than paying interest on the debt in 2040," Government Accountability Office Comptroller General David Walker warned federal lawmakers.
In testimony to the House of Representatives Ways and Means Committee, Walker said that scenario assumes President Bush's tax cuts are made permanent and spending for programs other than for health care and retirement grow with the economy.
Bush wants to make his tax cuts permanent, but even if they expire as scheduled in 2010, the country faces daunting budgetary pressures, Walker said.
Medicare and Medicaid health care programs for the elderly and poor, coupled with growing demands on the Social Security retirement program as the population ages, will dominate the federal budget, he said.
"Absent meaningful changes to these programs, the nation will ultimately have to choose among persistent, escalating federal deficits, huge tax increases, and/or dramatic budget cuts," he said.
Social Security was not now facing a crisis, Walker said, but it would be prudent to act sooner rather than later, and to address more-immediate problems facing Medicare and Medicaid.
Bush has raised the specter of bankruptcy for the Social Security system and aggressively promoted an overhaul with private investment accounts as a centerpiece.
But private accounts alone do not address Social Security's financial problems and would speed up its cash-flow problems, Walker said.
Walker suggested that lawmakers consider allowing the Social Security trust fund to sell its holdings of U.S. bonds on the open market.
That would allow the program more flexibility to manage its assets and raise money, but it would not be issuing its own bonds. The bonds are the only asset the trust fund holds and currently they can be redeemed only through the U.S. Treasury.