12 Mar Arithmetic

Arithmetic is the simplest (and probably the oldest) branch of mathematics. Most of us were taught arithmetic at a very early age, and while some of us remember better than others, more of us should be paying attention because the U.S. has a serious arithmetic problem. Actually, several problems.

The five largest expenditures in the U.S. budget are, in order: Social Security, National Defense, Medicare, Medicaid (including the Children’s Health Insurance Program and other related items), and interest on the national debt. Four of those five categories (all but defense) are, due to problems of arithmetic, growing and related. It’s the potential growth of these categories that is downright scary – and it’s my fault.

Well, my fault along with about 78 million others. The baby boom generation consists of those of us born between 1946 and 1964. Approximately 76 million persons were born in the U.S. during the baby boom, and while the numbers are not exact, there are about 78 million individuals currently living in the U.S. who were born in that 18-year span (due to immigration this number is higher than total births). The first baby boomers reached the age of 65 in 2011, and about 8,000 celebrate that milestone birthday on a daily basis. 8,000. Per day.

Therefore, simple arithmetic dictates that Medicare will continue to increase dramatically for many years. And, since the cost of medical care tends to be higher for elderly persons, and since medical cost inflation has far exceeded the general cost of living as measured by the Consumer Price Index, this Medicare budget item could be one wild ride. And Social Security, already the most expensive line item in the budget cannot be expected to shrink. What, you think a bunch of baby boomers will volunteer to reduce their benefits?

The Medicaid (and related) expenditures in the budget have been on a steady upswing as well. Health care cost inflation coupled with an increasing number of persons eligible for the program guarantee increasing outlays. Furthermore (if you can), try to figure out and add in the new expenditures that will begin in 2014 due to ACA, the federal health legislation. You’ll arrive at a large number.

And to top it all off, we pay for a big chunk of these things with borrowed money. Even with interest rates at the lowest levels of my adult life, interest on the national debt is the fifth largest item in the budget. A trillion dollar deficit will tend to do that. The arithmetic also dictates that the more we borrow, the more we pay in interest.

So, we have simple arithmetic leading to some very complex and difficult problems. It doesn’t take a rocket scientist or an arithmetic teacher to see that, but it will take some real leadership to craft meaningful, equitable solutions. Here’s hoping we get that leadership.

Be well.

Ed

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