Sorry kids, but the Baby Boom generation is about to suck you dry and create havoc for the federal budget. According to a new Government Accountability Office report, boomers are to blame for two of the five upcoming fiscal disasters crashing into the federal budget as they dip into Social Security and Medicare.
"Rising healthcare costs and the aging of the U.S. population have already begun to affect the federal budget, and their effect is expected to increase in coming decades as more members of the baby boom generation continue to retire and more people become eligible for federal health programs," says the new report.
What's more, says the grim GAO report, if the president and Congress don't move swiftly to begin making spending and taxing changes now, the crisis will get much worse. "Policy makers could develop a plan in the short term that could be phased in over time to allow for the economy to fully recover and for people to adjust to the changes. However, with the passage of time, the window to develop and implement such a plan narrows," says GAO.
So what are the biggest threats to the federal budget? The GAO broke out five.
The first has already begun to smack the budget: In 2008, the oldest members of the baby boom generation became eligible for early Social Security retirement benefits.
Second, Medicare hospital insurance outlays started to exceed cash income also in 2008.
Third, beginning last year, Social Security ran its first cash deficit in more than 25 years. This is troubling because the federal government for years has been borrowing the system's surpluses and now there's nothing left to borrow. Worse, the government is going to have to borrow just to pay back what it owes Social Security.
Fourth, starting this year, the oldest members of the baby boom generation become eligible for Medicare.
Fifth, by 2021, debt held by the public will exceed the historical high reached in the aftermath of World War II.
See the full GAO report.