Trouble with a capital "T" and that stands for "trillion"

From CNN/Money/Fortune: "The $34 trillion problem - Medicare is poised to wreak havoc on the economy. And our presidential candidates are avoiding the issue."

Unfortunately the day of reckoning is imminent. Sometime in the next President's first term, Medicare Part A (hospital insurance) will go cash-flow-negative, and it's all downhill from there. Medicare provides a wide range of services and subsidies to more than 40 million old and disabled Americans. As the country ages, Medicare and Medicaid (for those of any age with low incomes) will devour growing chunks of U.S. economic output. So will Social Security, but its cut of GDP should stop increasing around 2030. The federal budget has averaged about 18% of GDP over the past several decades. If that average holds and if the rules of our social insurance programs don't change, then by 2070, when today's kids are retiring, Medicare, Medicaid, and Social Security will consume the entire federal budget, with Medicare taking by far the largest share. No Army, no Navy, no Education Department - just those three programs.

The unfunded liability to Medicare over the next half-century is $34 trillion and yet there isn't a presidential candidate who isn't making unrealistic promises to enhance Medicare. It simply cannot be done because it means either an improbable tax rate that nobody will pay or the collapse of the U.S. credit rating and, by fiscal extension, the slow enervation of the government into a third-rate power.

Here's the author posing a question to Alan Greenspan:

Twice I have asked Alan Greenspan what he considers the greatest threat to the U.S. economy, and both times he has answered immediately with a single word: Medicare.

Washington does not have the will to reform what must be reformed, so watch in horror as the banks and our foreign creditors dictate terms to the U.S. government. Coming soon.

Hat tip to Bull Dog Pundit who has much more over at ABP.