The size of federal discretionary spending relative to the size of the economy was substantially reduced in the 1990s and it will be hard to go much further. There is broad agreement that America needs a strong defense in a dangerous world. It would be a mistake to cut support for research, education, child-care assistance, and other needed programs to finance a large tax cut. Budget projections must be based on a realistic view of what spending is likely to be. A strong economy demands investment in the future.
Fiscal discipline encourages private sector investment.
The Federal government makes health, technology and education investments that support American families and support the private sector. The Challenge for Social Security and Medicare Projections indicate that the population aged 65 and over will rise from its current share of about 12.5 percent of the total population to nearly 21 percent by 2040. Currently the social security and Medicare trust funds are running surpluses. But as the proportion of elderly in the population rises, this situation will reverse and the trust funds will run deficits and become depleted, in the absence of any reforms. Medicare also faces the pressures from projected increases in healthcare costs.