1 00:00:00,399 --> 00:00:05,780 Both Democrats and Republicans complain about America's national debt, what a looming crisis 2 00:00:05,780 --> 00:00:09,089 it is, and how we have to do something about it. 3 00:00:09,089 --> 00:00:12,839 And well they should. The numbers defy comprehension. 4 00:00:12,839 --> 00:00:17,479 Currently, the debt stands at around $17 trillion dollars, 5 00:00:17,480 --> 00:00:23,220 much of that coming in just the last few years. To put it simply, our government spent 6 00:00:23,220 --> 00:00:30,160 $17 trillion dollars more than it took in. That's one huge deficit, wouldn't you say? 7 00:00:30,160 --> 00:00:33,820 How did it happen? To answer that, we have to focus on three 8 00:00:33,820 --> 00:00:38,840 programs: Social Security, Medicare and Medicaid. 9 00:00:38,840 --> 00:00:44,640 Social Security is a government pension program for people over 65; 10 00:00:44,640 --> 00:00:49,100 Medicare is a government health insurance program for people over 65; 11 00:00:49,260 --> 00:00:55,700 and Medicaid is a government health assistance program for people who can't afford to buy insurance. 12 00:00:56,240 --> 00:01:01,840 The debt picture has admittedly become a little more complicated -- and more severe -- because 13 00:01:01,840 --> 00:01:06,430 of the massive increases in government spending on unemployment benefits and other federal 14 00:01:06,430 --> 00:01:11,050 assistance programs related to the 2009 recession. 15 00:01:11,050 --> 00:01:19,020 But the big three - Social Security, Medicare and Medicaid - remain at the center of the problem. 16 00:01:19,030 --> 00:01:26,030 In fact, spending in every other area, including defense, all other appropriations, and other 17 00:01:26,310 --> 00:01:31,979 federal entitlements, though significant, make up a smaller share of the economy than 18 00:01:31,979 --> 00:01:34,590 has historically been the case. 19 00:01:34,590 --> 00:01:39,130 These three programs are not new. The first Social Security check was issued 20 00:01:39,130 --> 00:01:42,950 on January 31, 1940. 21 00:01:42,950 --> 00:01:49,740 Medicaid and Medicare came into existence in the mid-sixties during the administration of Lyndon Johnson. 22 00:01:49,740 --> 00:01:55,490 All three programs were greatly expanded in 1972 during the Nixon Administration. 23 00:01:55,490 --> 00:01:59,770 And every year they gobble up more and more of the Federal budget. 24 00:01:59,770 --> 00:02:03,090 How much more? Just listen to these numbers from the Congressional 25 00:02:03,090 --> 00:02:10,090 Budget Office: In 1970 these three programs accounted for 21 % of all federal spending. 26 00:02:11,009 --> 00:02:17,569 By 2012 they accounted for 42% of all federal spending. 27 00:02:17,569 --> 00:02:24,569 And now we've added a fourth new Federal assistance program, the Affordable Care Act of 2010, 28 00:02:25,230 --> 00:02:27,849 otherwise known as ObamaCare. 29 00:02:27,849 --> 00:02:33,519 Just to give you one example, Medicare Part B, the part of Medicare that covers doctors' 30 00:02:33,519 --> 00:02:38,859 services, was originally projected to cost $500 million dollars a year. 31 00:02:38,859 --> 00:02:44,790 In 2012 it cost $164 billion. 32 00:02:44,790 --> 00:02:50,480 Whatever you think about the value of these programs: How are we going to pay for them? 33 00:02:50,480 --> 00:02:55,719 The Congressional Budget Office projects that before today's 25 year olds are ready to receive 34 00:02:55,719 --> 00:03:04,319 Medicare, these four programs -- Social Security, Medicare, Medicaid and the Affordable Care Act 35 00:03:04,320 --> 00:03:09,460 -- are expected to cost more than all the money the government collects in taxes. 36 00:03:09,469 --> 00:03:14,400 That would mean we would have to borrow money to pay for everything else -- our armed forces, 37 00:03:14,400 --> 00:03:17,249 road repair, everything. 38 00:03:17,249 --> 00:03:19,669 So, what do we do? 39 00:03:19,669 --> 00:03:26,340 Well, we could increase taxes -- massively. But to raise the kind of money we'd need, 40 00:03:26,340 --> 00:03:32,340 we'd have to significantly increase taxes on everybody, especially the middle class. 41 00:03:32,340 --> 00:03:36,469 That means taking a lot more money out of your paycheck and mine. 42 00:03:36,469 --> 00:03:41,040 Because if you think we could get what we need from the rich, think again. 43 00:03:41,040 --> 00:03:46,709 If we took all the earnings of people who make more than a million dollars, a 100% income 44 00:03:46,709 --> 00:03:51,049 tax, that would only net us a little more than $600 billion dollars. 45 00:03:51,049 --> 00:03:55,489 And obviously, we could only do that only once. 46 00:03:55,489 --> 00:04:01,749 The second answer, and much more practical one, is to cut spending; specifically, cut 47 00:04:01,749 --> 00:04:08,749 the rate of growth of the three legacy programs - Social Security, Medicare and Medicaid. 48 00:04:09,209 --> 00:04:12,769 That doesn't mean spending less money than we already are. 49 00:04:12,769 --> 00:04:17,560 It simply means not increasing our spending as fast as we have been. 50 00:04:17,560 --> 00:04:23,030 Social Security would be a good place to start. In 1940, the average life expectancy of an 51 00:04:23,030 --> 00:04:28,900 individual in the United States was less than 65, the age at which people begin to get Social 52 00:04:28,900 --> 00:04:33,240 Security. Today, average life expectancy in the US is 53 00:04:33,240 --> 00:04:37,220 almost 80. Obviously, it's time to move the age at which 54 00:04:37,220 --> 00:04:41,199 Americans receive Social Security to reflect our longer life span. 55 00:04:41,199 --> 00:04:45,000 There are lot of common sense reform ideas out there. 56 00:04:45,000 --> 00:04:49,289 But if we don't enact a few of them soon, we are just going to continue to watch the 57 00:04:49,289 --> 00:04:52,659 debt grow bigger and bigger. 58 00:04:52,659 --> 00:04:58,419 This issue -- controlling spending -- should be of intense interest to everyone, but especially 59 00:04:58,419 --> 00:05:02,599 Americans under thirty. If we go on spending much more than we take 60 00:05:02,599 --> 00:05:06,580 in, they're the ones who are going to be left holding the bag. 61 00:05:06,580 --> 00:05:12,319 So the next time a politician proposes a generous new government benefits program, the first 62 00:05:12,319 --> 00:05:18,020 question should be "where is the money going to come from to pay for it?" and if he or 63 00:05:18,020 --> 00:05:23,240 she is honest, there is only one answer: "from you." 64 00:05:23,240 --> 00:05:27,400 I'm Michael Tanner of the Cato Institute for Prager University.