I read an article by Daniel Mitchell that discusses the fiscal trouble both the US and Europe currently are experiencing. Fortunately, the Europeans are fiscally worse off than the Americans. They started their welfare system earlier and the Europeans now spend an astonishing 49 percent of economic output! Not surprisingly, Greece, Portugal, and Ireland have all put their hands on bailouts.
Fortunately, US have time to turn things around before it experiences what Europe is currently facing. However, there isn’t too much time as US is only a few decades behind Europe. According to long-run forecasts from the Congressional Budget Office, US fiscal deficit will reach European levels as the baby boom generation retires. Daniel believes that needs to start turning Medicaid over to the states, start modernizing Medicare into a premium-support system, and start transitioning to a system of personal retirement accounts for younger workers.
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