> How to avoid this sorry fate? The economic prescription is straightforward; the politics of delivering it are anything but. Even before the interest-rate shock, it was easy to anticipate that deficits would increase over time. The biggest share of federal spending is mandatory expenditures on social security, health insurance and the like, which are prescribed by laws and not subject to the vagaries of the annual budget-setting process. Already big, they will bulge as the population ages. Annual spending on income support for the elderly will be as much as all spending on education, the environment, national defence, science and transportation by 2033.
> The government estimates that trust funds which help bankroll both social security and health programmes will be insolvent by the early 2030s. At that moment America would face a basic choice between slashing benefits and raising taxes. A similar calculation will apply to all other aspects of the federal budget: some combination of reducing expenditures and raising revenues is the only way to prevent a crippling rise in the federal deficit.