The Obama campaign last week unveiled a new interactive feature supposedly showing how a fictional girl named "Julia" would benefit from President Obama's policies over the course of her lifetime. The result was an ode to government dependence and a celebration of the cradle-to-grave welfare state. In the Obama campaign's script, Julia enrolls in Head Start as a toddler, uses government student loans, gets Obamacare subsidies throughout her working life, and lives off Social Security and Medicare in old age.
Noticeably absent from the presentation was any mention of the mounting debt that the nation's welfare-state obligations would impose on Julia, or the massive spending for which she'd be on the hook if nothing is done to change course. It's worth taking a moment to fill in the blanks.
By the time the hypothetical Julia reaches age 24 (assuming she's born today), the nation's debt is projected to rise to 195 percent of its gross domestic product, according to the Congressional Budget Office's alternative fiscal scenario (which assumes Congress keeps acting as it has in the past). To put this number in context, keep in mind that Greece, mired in a fiscal crisis that has threatened all of Europe, had an estimated debt-to-GDP ratio of 165 percent in 2011, according to the CIA World Factbook.
The CBO tells us that after 2037, the debt-to-GDP ratio will remain above 200 percent, but it doesn't provide an annual breakdown after that. But it does have projections on government spending through 2085, and by the time Julia celebrates her 73rd birthday, government spending will equal 76 percent of the nation's economic output. In order to raise the revenues needed for such robust government, taxes would have to be four times the pos/world/ War II average of roughly 18 percent of GDP. Obviously, the economic consequences of taxes of this magnitude would put Julia in Never Never Land.
Though Obama boasts that Julia could depend on Social Security and Medicare when she retires, the two programs alone are running a long-term deficit of $63.3 trillion, according to projections by the programs' trustees released last month. The Social Security system is already paying out more benefits each year than it is receiving in payroll tax revenue. General tax revenues are currently making up the difference because the rest of the government still owes the Social Security money for the years during which it dipped into the system's surplus. Without changes, those IOUs will run out by 2033, and Social Security will have to start slashing benefits by 25 percent.
Of course, these dates and numbers are all hypothetical. The economic and financial system would collapse well before the nation's debt reached levels multiple times the GDP. But what we know with certainty is that the longer the nation waits to do something, the more severe the tax increases and spending cuts will have to be. What is Obama's plan to spare Julia from this bleak future? He doesn't have one. It's much easier to sell voters on a benevolent government that bestows goodies at no cost to anybody.