The United States economy is in rough shape, has accumulated a lot of debt, and is projected to continue to accumulate debt for some years to come. However, this debt is minuscule compared to the debt that has the potential to develop from our lack of alterations to the entitlement programs: Social Security, Medicare, and Medicaid in particular. A report by the Government Accountability Office (2008) states that if policy actions are not taken to reduce the deficit, not only will the government face unsustainable growth in debt but this would unavoidably result in a declining GDP and living standards in the future.

The most recent report from the Social Security and Medicare trustees (2009) states that our waiting to take action, in combination with the current recession has reduced to the date of reckoning to 2037. At this time the Social Security system will have exhausted the trust fund and will only be able to pay out about three-fourth of expected benefits. To wait and reform the system at this point would require a drastic change. Moreover, the Trustees Report shows that Medicare is in the worse shape as we are currently using the trust fund to pay benefits and with the HI trust fund being depleted by 2017. The costs of health care are projected to increase much more drastically than the earnings per worker. Acting soon to phase in changes will allow reforms to be less severe and also will allow more time for those most impacted by changes to adjust.

While Social Security is an important element of the long-term fiscal outlook, the real driver is health care spending. The federal health programs are a much larger, rapidly growing, and immediate problem. The government’s obligations to the newly created Medicare Part D will alone exceed the unfunded obligations for Social Security (GAO, 2008). The rise in health care costs is not only a federal problem, but also a challenge for state and local governments. Medicaid along with health insurance for state and local government employees and retirees is the primary issue surrounding their long-term fiscal problems. In addition, problems surrounding health care for children continue as researchers call to attention investing in our children’s health as part of the fiscal solution. It could be stated that the future of our country, the country that will exist for our children and grandchildren will be worse if we do not take action now and make touch choices. President Obama has issued a call to the American people to partake in a Grand Bargain. Tough choices need to be made to reform our entitlement programs and shape up our economy. With a Grand Bargain, everyone needs to lose a little, rather than a certain demographic or cohort taking on the entire burden.

And it seems like the time for a Grand Bargain in upon us. Perhaps there is nothing quite as convincing, bring together party lines and prompting politicians to take action, like a financial crisis. Many state that this may be the biggest advantage for President Obama because we are at a point where everyone is forced to focus on the nation’s long-term fiscal problems (Scherer, 2009). This does not mean that the Obama Administration will have an easier task than those before them but it seems the difficulty has not discouraged them. Provisions of the stimulus bill show that his Administration has already started the move to a more cost-effective health-care system and this may shed some light on what may be in store for a larger revamping of the system. As he continues this difficult reform process echos of this “new era of responsibility” seem to pop up in his words and actions. Are we finally in a new era of American society and government?

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