Reuters It is make or break time for a special US committee on deficit reduction, but even if it succeeds in striking a last minute deal, it will not be enough to address future financial strains from an aging population. The panel needs to have a deal in hand by Monday to meet a Nov. 23 deadline for a vote by the 12 “super committee” members. But as negotiations enter the final days after more than two months of intense talks, the six Democrats and six Republicans remain far apart on the central issues of tax increases and spending cuts for healthcare and retirement programs that threaten to overwhelm the federal budget. While many lawmakers have pushed for a “big deal” of $3 trillion to $4 trillion in spending cuts and tax increases over the next decade, the super committee was asked to find at least $1.2 trillion in deficit reduction over 10 years. Failure to reach agreement will trigger a similar amount of automatic spending cuts split between military and domestic programs. Even if the panel manages to strike an eleventh hour deal, bitter partisan battles over US deficits, which have topped $1 trillion for each of the past three years, will almost certainly continue through next year's presidential and congressional elections. “Whatever they do this time: The trigger, or a partial deal, or a $1.2 trillion non-structural deal, and even the $3 trillion to $4 trillion deal, it is not the end of deficit reduction,” said Ethan Siegal of The Washington Exchange, which tracks Washington for investors. The reason is the 78 million baby boomers born between 1946 and 1964. The first wave is already beginning to draw on Medicare health and Social Security retirement benefits, leading program costs spiraling higher. US Census data for 2009, the most recent available, show about 8.6 million baby boomers, 11 percent of the total, are already receiving Social Security benefits and about 6.6 million were receiving disability benefits. This should come as no surprise to lawmakers. For years the non-partisan Congressional Budget Office has issued dire warnings about the budget effects of an aging population and rapidly rising healthcare costs. If nothing changes, federal spending on health and retirement programs will grow from roughly 10 percent of the total US economy currently to about 15 percent of GDP 25 years from now, according to the CBO. By comparison, spending for all federal programs averaged just over 18 percent for the past 40 years, the CBO said. “Putting the federal budget on a sustainable path will require significant changes in spending policies, tax policies, or both,” CBO director Douglas Elmendorf told the super committee as it began its work in early September. In the end, it appears the super committee will do neither. __
