Think again. Social Security and Medicare take up an increasing amount of the federal budget each year, and that trend will only increase as Baby Boomers retire. The National Center for Policy Analysis crunched the numbers and this is what they found:
In the absence of a tax increase, if the federal government keeps its promises to seniors and balances its budget:
- By 2012, the federal government will stop doing 1 in 10 other things it has been doing.
- By 2020, the federal government will stop doing 1 in 4 things.
- By 2030, about the midpoint of the baby boomer retirement years, the federal government will stop doing about 1 in 2 things.
According to the Congressional Budget Office (CBO), if Medicare spending continues to grow at the historical growth rate of total health care spending:
- Social Security, Medicare and Medicaid (the health care program for the poor) will consume nearly the entire federal budget by 2050.
- By 2082 Medicare spending alone will consume nearly the entire federal budget.
The CBO also found that if federal income tax rates are adjusted to allow the government to continue its current level of activity and balance the budget:
- The lowest marginal tax bracket of 10 percent would have to rise to 26 percent.
- The 25 percent marginal tax bracket would increase to 66 percent.
- The current highest marginal tax bracket (35 percent) would have to rise to 92 percent!
- Additionally, the top corporate income tax rate of 35 percent would have to increase to 92 percent.