In late May, 2003. a report on the US budget deficit was released to the public. The study had been commissioned by secretary of the treasury Paul O'Neill, before he was fired. The study had not been released, perhaps because it was one of many such studies, with the case being portrayed not totally probable; or perhaps because those in favor of a gigantic tax cut did not want this in the picture.
The report does not seem to specify a certain period in which the deficit will raise to this size, but seems to be saying that this is the total value of payments currently owed in social security or medicaid. This amount of money owed is fairly daunting, to say the least, since total United States economic output is only around 12 trillion dollars a year. Shoring up this deficit would require an across the board, 66 percent tax increase.
However, I do not think the situation is bad in quite this way. It is bad in quite a different way. The problem is that no one currently in the administration can remember the last true economic crisis this country had: World War II. World War II was an actual economic crisis, where the country may not have been able to actually produce enough to survive. Since then, we have had almost 60 years where our largest economic problems have been trying to pay for free things with stuff we don't have, and, based on all the talk of "creating jobs", we seem to want to decrease productivity too.
The economic crisis that will hit us in about twenty years is an actual crisis of production. Let me phrase it this way: if you have only 500 dollars in your checking account, and you stop in at 7-Eleven because you need a 5000 dollar wedding catered, what is your largest problem? It is not that you don't have enough money. It is that 7-Eleven does not cater weddings. The United States currently has a limited supply of medical services, amounting to about 1 trillion dollars a year. The government can tax everyone 75% of their wages, and actually end up having 44 trillion dollars, but if there isn't a supply of medical services, it really will not matter. Of course, if the government does have a large supply of money, it can manage to invest in more hospitals, more clinics and more education for medical personel. But the truth is, in a country where senior citizens outnumber active workers, and where medical culture expands to the point where a single dose of a pill can buy you 50 kilograms of rice, it will take much more than number shuffling, or even heavy taxation, to solve the crises in production.