Transcript
ALICE RIVLIN: This book is called Restoring Fiscal Sanity: The Long-Run Challenge. Some of you will remember that we put out a book last year called Restoring Fiscal Sanity. We have not accomplished it yet. So we are trying again, but with actually a very different emphasis. The subtitle is significant. This book focuses on the big choices that Americans will have to make over the next several decades. Last year, we talked about alternative ways of balancing the budget over the coming decade, which, daunting as it is, is actually the easier problem. And now we shift attention to the longer-run picture. And this book is about the big choices that have to be made as the population ages and medical costs increase.
These choices, obviously, are the consequences of some very good news, two pieces of very good news. Americans are living longer and they are enjoying much more effective, but more expensive, medical care. How we pay for aging and medical care is a pervasive problem. It's not just a government problem. It affects families, it affects communities, it affects businesses and all levels of government. But we see it very starkly in the federal government, and the reason we do is that, even now, long before the baby boom generation is--not "long" before, but before the baby boom generation retires, we see that a large portion, around 42 percent, of the federal budget is devoted to Social Security, Medicare, and Medicaid, which are heavily programs for older people. Some of you may question why we put Medicaid in this category—that's for poor people, right? Well, it is, but it pays a very high portion of the nursing home care, well over half, and will be greatly affected by aging.
So as spending for these programs rises, we will have to decide as a nation what to do about it. Do we raise taxes to keep the promises to the elderly, do we slash other federal activities, or do we adjust the promises so they are not so expensive?
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