Editor’s Note – As part of her participation in the Concord Coalition’s Fiscal Wake Up Tour, Isabel Sawhill explains why addressing rising health care costs has to be the first step in solving the nation’s long term fiscal problems.
I’m Isabel Sawhill, a senior fellow at the Brookings Institution and a member of the fiscal wake-up tour. The federal budget is on an unsustainable path Right now, we have deficits that are virtually unprecedented. Now, that is as it should be, as we are in a very depressed economy and government has had to be the spender of last resort. So the big deficits we are running right now are not the real problem. The real problem is the continuing red ink we will have as a result of the aging population and rising health care costs.
Why are deficits so bad? First of all, if we don’t address them we are simply courting another economic crisis. Second, because we are borrowing so much of the money from foreigners, we are becoming dangerously dependent on other countries to keep our economy running. Third, we are passing on a mountain of debt to our children and grandchildren. And finally, we are paying an enormous amount of our taxes just on interest on the national debt.