We are not living above our means. We are living above our willingness to pay for spending we have obligated ourselves to pay for. For example, think of the fiscal situation we would be in today, had we just maintained the Clinton era tax rates and kept spending growth in line with where we were during the Clinton years. The difference today would be night and day. Medicare and Social Security would be solvent for decades longer than they are now. Debt service as a percentage of outlays would be a fraction what it is.
This notion that we are going to cut or privatize Medicare is nonsense. It is never going to happen. We have Medicare because the demographic it insurers, the old and sick, are not insurable in the private sector without massive subsidies. There is no way in hell that Aetna can ever sell your grandma a policy that she could ever afford, that they would not lose money on, without huge government subsidies. Thus, since we are never going to let the vast majority of our elderly go without health care and coverage, we will always have Medicare. So we need to just recognize that reality and accept we have to pay for it.
As to Social Security. Same thing, its nonsense to think we will ever privatize it or substantially cut it. Its not going to happen. We just need to accept that, and pay for it.
Take the cost of debt service out of the picture, and then compare our federal government outlays as a percentage of GDP to our peer nations. We are one of the lower ones. Unless you want to cut the Military in half, which is never going to happen, then there is not a lot of realistic opportunity to substantially reduce federal government spending. Thus we need to wake up, accept reality, and buck up and pay for our fiscal obligations.
