“The U.S. government is going to need to enact two rounds of painful austerity measures if it wants to avoid and S&P downgrade, according to Citi Managing Director Steven Wieting.
Wieting says that it’s rising healthcare costs that will prevent one round from being enough. In fact, he believes it is “inevitable” that debt to GDP will rise as a result of the aging U.S. population.
From Steven Wieting:
According to quite reasonable estimates from the International Monetary Fund, the U.S. is on course to have the world’s largest federal healthcare system relative to GDP in under 15 years. Yet that system would cover only those aged-65+ and a segment of the lower income population, or roughly 1/3rd of the public. In most other advanced countries, lower spending levels provide limited, rationed, but fairly universal access to healthcare for all. Strikingly, the U.S. healthcare contribution to fiscal deficits is more severe than Japan’s despite far easier demographic challenges for the U.S. ”
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