All the talk about what to do about the fiscal cliff is on the relatively short-term side of the story: tweaks of tax rates, elimination/capping of some deductions and relatively minor changes on spending.
The hard reality not being dealt with is the large size of the Baby Boom Cohort (1946-1964). The leading edge of that cohort started retiring in 2011. If life expectancy holds at 78 years, the trailing edge will pass away in 2042. Thus, there is a 31 year window when this group will be collecting Social Security and Medicare benefits.
Unfortunately, program benefits were promised to this cohort that are now financially unsustainable.
But is anyone really addressing this in DC?
I don't have access to CBO economists to project out how big the changes need to be to prevent the deficits and debts from getting worse than they are now. But I would think the most obvious thing to do on Social Security is to begin trimming back the benefit formula and for Medicare to begin asking participants to bear a greater cost of the program. Of course, politically, people will say, you want to throw grandma under the bus and push grandpa off the curb. But if nothing is done, the cost of these programs is going to crush the next generation in taxes and debts.
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