Cohabitation rates have increased significantly during the last two decades. Cohabiting individuals appear to have weaker workforce engagement and earnings. With changing U.S. demographics, the trend toward favoring cohabitation over marriage appears likely to continue.
Treasury debt held by the public is an explicit pay-as-you-go obligation. The government also runs implicit pay-as-you-go obligations, such as Social Security and Medicare Part A, which are twice as large. Both types of obligations require tax increases and spending cuts to balance the budget over time.
U.S. population growth is projected to decline, and the population will become much older over time. Preventing these outcomes will require faster immigration by several multiples of its current rate.
PWBM estimates that---even under myopic expectations---financial markets cannot sustain more than the next 20 years of accumulated deficits projected under current U.S. fiscal policy. Forward-looking financial markets are, therefore, effectively betting that future fiscal policy will provide substantial corrective measures ahead of time. If financial markets started to believe otherwise, debt dynamics would âunravelâ and become unsustainable much sooner.
Several revenue and spending provisions in The Tax Cuts and Jobs Act (TCJA) are scheduled to expire (âsunsetâ) by the end of 2025. We estimate that âextendersâ (âno sunsetâ) would increase the federal debt held by the public from 226.0 percent of GDP to 261.1 percent of GDP by 2050.
PWBM estimates that President Bidenâs new Medicare proposal would increase the solvency of the Medicare trust fund from the year 2028 to 2053. However, a significant share of that increase comes from redirecting existing (current law) revenue to the trust fund. Another portion comes from unspecific expenditure reductions that lack the details required to score. Counting only new income without unspecified expenditure reductions, we project, as an illustrative alternative, that the HI trust fund would remain solvent until 2037.
Under current law, we project that national debt will rise to 225% of GDP by 2050 and continue to rise thereafter. Changing demographics will reduce future economic growth.
PWBM estimates that Medicaidâs inflation adjusted expenditures on Long Term Care services will increase from $130 billion in 2020 (0.62 percent of GDP) to $179 billion in 2030 (0.71 percent of GDP). We project that Medicaid expenditures on Nursing Home and Home Health will increase 4.7 percent and 6.9 percent per year above inflation through 2030, respectively.
