In the latest version of the Congressional Budget Office's (CBO) Long-Term Budget Outlook report, these words of doom appear: âIf the government saved all of the surpluses projected over the next decade, serious budgetary problems would not arise until the second half of the century."
The first World War II baby boomers, those born in 1947, turn 53 this year, and they are already starting to plan for retirement. The CBO suggests that the combination of impending aging and retirement of the baby boom generation plus continuing growth in the cost of health care âwill dramatically increase spending for federal health and retirement programs.â
The nonpartisan agency, which typically provides analysis but does not take positions of advocacy, warns that under current policies, the âfederal deficits are likely to reappear and eventually drive federal debt to unsustainable levels.â CBO strongly recommends putting away resources now to prepare for the onslaught of baby boomers that will eventually demand services from the government.
The agency recommends a reduction in the rate of increase of spending on Social Security, Medicare, and Medicaid programs by reducing benefits relative to current law. If current policies stay in place, the spending on these programs will rise to more than double the share that exists today of gross domestic product.
CBO also recommends changing the tax system to encourage people to save more.