WASHINGTON — What lies ahead is an “entitlement tsunami,” said Michael D. Tanner, a senior fellow at the Cato Institute, in a speech here.
The budget deficit will rise from the current to over 35% by the end of the century, the domestic policy researcher predicted during the opening address of a retirement conference co-sponsored by LIMRA, LOMA, and Society of Actuaries.
But that is not as scary as what lies ahead in the area of entitlements, said Tanner, who was a key organizer and advocate for private accounts in Social Security during the Bush administration.
Roughly 27% of gross domestic product is due to government spending, mostly for Medicaid, Medicare, and Social Security, Tanner said.
But by the end of the century, total government spending–with the new health care legislation factored in–will reach over 80% of GDP, Tanner predicted.
“Clearly, that’s not sustainable,” he said.
Congressional commissions will come out saying that the country needs to raise taxes to fill the gap, he continued, but he said the big question is, can the country raise enough taxes to pay for what is needed?