Soon we'll be nostalgic for $400 billion deficits

Remember the good ole days, we'll reminisce, when our country wasn't awash in stunning debt and floated by Chinese bondholders? When we controlled our own economic destiny and didn't have to beg OPEC ministers to pump more crude? Ruefully, we'll look back and wonder why we didn't do something when the entitlement problem was manageable. But for now, it's candy for everyone!

The budget situation is already dire. In the last six years, the federal government has spent some $1.8 trillion more than it has taken in. This year, the deficit will hit an estimated $410 billion. If the economy falls into a recession, the gap will grow.

Believe it or not, these are the good old days. In the next few years, the budget will begin to show the effects of a mammoth event that has long been dreaded: the retirement of the baby boomers. Social Security and Medicare already account for one-third of federal spending, and over the next 30 years, they are expected to nearly double in cost as a share of the total economy.

A recent report from the Brookings Institution found that just to pay for all federal outlays, we would have to raise taxes by at least one-third by 2030. To avoid such tax increases without cutting Social Security, Medicare and Medicaid, our leaders would have to make cuts of 50 percent or more in all the other federal programs. Or we could slash benefits for the elderly.

Oh, that'll happen. If you thought entitlement reform was difficult before, wait until millions of baby boomers join the public rolls and spend their retirement boating and writing letters to Congress. Forget it.