July 14, 2004 | WebMemo on Federal Budget
For more information on research on entitlements, visit our Entitlements page http://www.heritage.org/Issues/Retirement-Security/Entitlements . Also check out our Budget Chart Book for updated PowerPoint charts on entitlements http://www.heritage.org/BudgetChartBook .
In this PowerPoint presentation, Heritage Foundation Vice President for Domestic Policy Stuart Butler illustrates how runaway entitlement spending will force future tax increases.
While discretionary and defense spending will decline relative to GDP in coming years, spending on Medicaid, Social Security, and especially Medicare is set to explode. Add in estimates of interest on the national debt, and the picture becomes clear: Federal spending will approach 35 percent of GDP by 2050, up from about 20 percent today.
The bottom line, writes Butler, is that without entitlement reform, a balanced budget would require taxes to rise about 15 percent in 10 years, and 30 percent in 20 years. Any politician who promises to balance the federal budget without curbing entitlement spending (or eliminating all defense and discretionary spending) must, by necessity, support major tax increases.
View How Uncurbed Entitlements Will Force Large Tax Increases by Stuart Butler, Ph.D. (requires PowerPoint or PowerPoint Viewer)