The deficit is nearly 100 $Billion less than near term forecasts, vindicating Bush's tax cuts...though the media has not emphasized that. However, the BIG problems are ahead without changes in the policies underlying the health care entitlements.
"As the baby boomers retire, not only will Social Security outlays rise steeply, but Medicare and Medicaid spending also will soar to staggering levels unless policy is changed, Holtz-Eakin said. Federal spending on the two health care programs will rise from about 4 percent of GDP now to 20 percent of GDP by 2050, based on current cost trends and demographic projections.
"So it's hard to get excited about a $318 billion deficit when you're looking at a projection suggesting that 318 will turn into 1,318 if you don't do something," Holtz-Eakin said. "At the moment, the deficit is something this economy can handle. It's the going forward part that worries me.""
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