With so many areas of agreement, why do Steuerle’s characterizations of the fiscal challenge and mine feel so different? More importantly, why are they so different? The reason, I think, is that Steuerle sees the fiscal imbalance as the manifestation of deep malaise within the American polity, and I do not. What Steuerle sees as problems, I see as achievements. What Steuerle sees as prodigality, I see as parsimony.

Let’s start with social security. This program is managed through a trust fund, distinct from, but embedded in, the overall budget. The annual reports of trust fund balances over the succeeding 75 years have indisputably promoted long-term planning. I suspect that the trust fund framework helps explain the remarkable fact that Congress has never enacted a social security benefit increase without indications that revenues would be sufficient to pay for them. More recently, the annual reports have fostered debate on how to cope with projected trust fund deficits. That debate has gotten pretty intense, even though social security trust fund revenues have exceeded expenditures for decades, do so today, and are projected to continue to exceed revenues for many years to come.

The trust fund framework has fostered relative parsimony in the U.S. social security system. The U.S. ratio of benefits to earnings, 25th among 30 OECD nations, averages under 40 percent, and is falling. Although the number of beneficiaries is projected to rise 46 percent between 2010 and 2025, total benefits will rise only 17 percent, just 0.8 percent of GDP. The gap in those numbers reflects benefit cuts enacted decades ago in anticipation of the Baby Boomers’ retirement.

I regard it as a major achievement, not as an indicator of fiscal sclerosis or an abandonment of fiscal democracy, that the U.S. pension system assures U.S. workers inflation-protected income equal to a reasonably stable fraction of earnings. Steuerle is perturbed that when he runs his spreadsheet, the result shows that the present discounted value of total benefits for many workers will be many hundreds of thousands of dollars. There is nothing here about which to be shocked or disturbed. Benefits are modest. The commitment is easily affordable. Between now and 2050, long after the last Baby Boomer retires, the total increase in the cost of social security will be less than 1 percent of GDP. Rather than signaling fiscal sclerosis or a failure of fiscal democracy, these pension commitments represent fiscal statesmanship or—if the term had not been debased—compassionate conservatism.

Projected growth of federal health care spending accounts for all—in fact, more than all—of anticipated government deficits (see my Table 1). But the reason for this spending growth is not fiscal prodigality. Medicare and Medicaid pay less—not more—than do private insurers for physician and hospital services. Projected spending growth principally reflects two forces: demographics—the increasing proportion of the U.S. population that is elderly, disabled, or poor and hence eligible for public benefits; and rapid technological advance, which has multiplied the menu of beneficial diagnostic and therapeutic interventions and pushed up perperson spending. Spending levels are inflated also by excessive use and needlessly costly provision of some services. But both the level and the trajectory of health care spending reflect systemic shortcomings in the way the United States pays for health care and how health care delivery is organized and managed, not fiscal sclerosis or a failing democracy.

Population aging is inexorable—and desirable. Nor should anyone hope that the pace of technological advance slows. Repeated studies have shown that improvements in health outcomes (notably, reductions in infant mortality and death from coronary disease) directly traceable to technological advances have produced benefits worth far more than the total increase in health care spending. The technological advances that explain most past growth of health care spending brought profound life-changing benefits to those who gained access to them. The future gains that are implicit in the projections of rapid health care spending growth will also be a cause for celebration, not hand-wringing.

The challenge for the nation is to reduce low- and no-benefit care and to improve the efficiency with which beneficial care is produced. That is what health care reform was, and is, about. Achieving those goals will take many, many years—many more years, in fact, than the period within which the federal deficit must be brought under control.

That means that there is a temporal disconnect. Health care reform is of enormous long-run societal and budgetary importance. But the nation cannot delay dealing with budget imbalances until health care reforms take effect. Like it or not, therefore, Congress must increase taxes and/or cut spending. Those measures should take effect as soon as economic recovery is well established and well under way. Negotiating these changes will demand more pragmatism than political leaders have recently shown. But dealing with the fiscal gap does not require abandoning the nation’s commitment to assure the elderly, disabled, and poor health care approximately like that enjoyed by the rest of the population. It is not evidence that the United States is trapped in some fiscal cul-de-sac. This nation treats its elderly and disabled less, not more, generously than do most other developed nations. Its demographics are more, not less, favorable than are those of most other developed nations.

To be sure, the nation faces a fiscal challenge. So Americans will have to accept some tax increases and some spending cuts. The required changes are significant and will be hard to negotiate. But they do not require wholesale revision of the role of government. The challenge results from a combination of good news (increased longevity), a uniquely costly health care system, and imprudent tax cuts enacted over the past decade in defiance of long-term fiscal demands. It does not look nearly as daunting as other challenges that the nation has faced and surmounted.