HT John Goodman's Health Policy Blog: Federal Debt
From "Nation's soaring deficit calls for painful choices" USA Today 4/12/10
Under Obama's budget plan, the USA's debt in 2020 would be nearly the size of the entire economy then. Interest costs would be $900 billion, five times today's level..."To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above," Federal Reserve Chairman Ben Bernanke said last week...'So far this fiscal year, the debt held by the public — not including money the government owes itself — is 58% of the U.S. economy...Moody's Investors Service issued a warning in March that the nation's triple-A credit rating would come under pressure unless economic growth exceeded projections and tougher actions were taken to tackle the deficit...Congressional Budget Office director Douglas Elmendorf calls the 90% projection "very worrisome..."
Real solution: Gradual scaling back of Medicare and Social Security:
Raising Medicare's eligibility age from 65 to 67 would save $86 billion over 10 years. Raising the premium for doctors' bills from 25% to 35% would save $217 billion...[as well as]raising taxes or scaling back benefits for high earners, and increasing the early and regular retirement ages, now 62 and 67...Raising the retirement age faster, so that it reaches 67 in 2020 rather than 2027, would save $92 billion.
Read the rest here.
Update: Harold linked to the following graph in the comments. The loss of purchasing power is the consequence of monetary inflation by the government as a way to deal with the country's massive debt.