sustainability and an explicit commitment to the goal of aligning revenues and spending over the long term. The committee’s scenarios allow some time for debate and response and for correction of the short-term economic situation by assuming that policy changes take effect beginning in 2012.

Only if the process is supportive of forward-looking and prudent fiscal policy choices can this problem be solved. If the current federal budget process is found to be a hindrance rather than a help—too short-sighted and cumbersome—then the first step for leaders may be to change it. The committee’s ideas for how to establish a new budgeting regime that is forward-looking and provides incentives and means of accountability to encourage responsible, far-sighted actions, are presented in Chapter 10. Reforms can help leaders act as responsible stewards of the interests of the nation’s children and grandchildren. The committee favors reforming the federal budget process to use better information about the long-term budget outlook as a basis for setting medium- and long-term fiscal goals and to consider adoption of new procedures to hold leaders accountable for responsible fiscal stewardship.

It is not the job of a group of experts, but rather the job of leaders and the people, acting through the political process, to make the necessary choices. Those leaders who recognize the seriousness of the challenge will realize that all other important policy goals are hostage to first putting the budget on a sustainable course. Their job must be to lead a creative national dialogue, beginning now and pressed vigorously, to help the United States find a way to a sustainable fiscal future.

NOTES

  

1. Greater uncertainty implies the discounting of future costs and benefits at a higher rate. The higher the discount rate, the smaller future costs and benefits appear when compared to costs and benefits in the near term. Great uncertainty would therefore favor a decision to delay action unless the distribution of expected outcomes between the two alternatives were asymmetrical. For an interesting analysis of this issue applied to global warming policies, see Nordhaus (2008), especially Chapter 9.

  

2. A new set of population and life expectancy forecasts for the United States, with a focus on transitions that will take place by mid-century, illustrate potential budget effects of hypothesized accelerated advances in biomedical technology that either delay the onset and age progression of major fatal diseases, or slow aging itself. “Results indicate that current forecasts of the U.S. Social Security Administration and U.S. Census Bureau may underestimate the rise in life expectancy at birth for men and women combined, by 2050, by from 3.1 to 7.9 years. As such, there could be 164 to 419 million more person-years-of-life lived among the population aged 65 and older by 2050 than current government estimates predict, and cumulative outlays for Medicare and Social Security could be higher by $3.2 trillion and $8.3 trillion” (Olshansky et al., 2009). If such an alternative forecast proves correct, the policy adjustments needed to attain budget sustainability would have to be much larger than portrayed in this report.



The National Academies | 500 Fifth St. N.W. | Washington, D.C. 20001
Copyright © National Academy of Sciences. All rights reserved.
Terms of Use and Privacy Statement