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27 Oct, 2012

Warning: The Coming U.S. Fiscal Tsunami Threat To Future Generations


October 23, 2012, STANFORD, Calif.–(BUSINESS WIRE)–Hoover Institution Press today released Entitlement Spending: Our Coming Fiscal Tsunami, by David Koitz. Although the nation’s largest entitlement programs—Medicare, Medicaid, and Social Security—are perceived as pillars of the U.S. governmental safety net, Koitz argues that those programs are actually the largest drivers of a severe and impending fiscal crisis.

Koitz reminds readers that the U.S. national debt is at its highest level in sixty years and over the next decade alone, the U.S. could add nearly $13 trillion to it unless there is a change in course. He explains the U.S. can no longer ignore the issue or set it aside. In the interest of the nation’s economic stability and well-being, he argues, policy makers must put forth a clear and comprehensive plan to trim the growth of those three programs.

The book offers two principal policy paths: one, that the U.S. increasing longevity during the past 75years should be recognized by raising the age at which citizens become eligible for Medicare and Social Security benefits; two, that spiraling health care costs will only be tamed by more out-of-pocket spending by health care consumers. Medicare and Medicaid need to lead by example through measures that limit spending increases, impose higher deductibles and copays, and allow market forces to play a role by giving recipients the opportunity to use their Medicare dollars to buy their own health insurance.

The problem with the U.S. entitlement programs, Koitz contends, is not that they are failing but rather that they are driving up the Treasury’s debt at a rate faster than we can possibly accommodate, particularly as more baby boomers reach retirement age. Thus, the U.S. economy’s ability to grow, national security, and standard of living are threatened.

Although the U.S. is the world’s largest economy, it accounts for one-fourth of the debt issued by all governments worldwide. It may seem inconceivable, Koitz argues, but someday the world may not want to lend the U.S. more money. If the economy slips because of the weight of debt, the dollar’s dominance could too. He emphasizes that the United States desperately needs policy makers who are willing to address the risk of a full-blown debt calamity by reining in spending and modifying expectations of future Medicare, Medicaid, and Social Security recipients.

The problem, he argues, is too immense and too imminent to “kick the can down the road again. It’s our problem in our time and it would be unconscionable to pass it along to future generations.”

David Koitz is a visiting fellow at the Hoover Institution and a consultant involved with a variety of public policy matters. Serving as an analyst on Capitol Hill for more than twenty-five years, Koitz has worked for numerous members of Congress and various congressional committees. Born in Springfield, Massachusetts, he is a graduate of the University of Massachusetts and the American University.

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