Yes entitlements are the key. They are the biggest driver of our debt. But you have to raise the debt ceiling regardless in the short term.
For example, by law, the General Fund pays 75% of the costs for Medicare Parts B and D. The premiums collected only account for 25% of the program costs. In FY 2011 the General Fund paid $222 billion for Medicare Parts B and D.
SS has been running in the red since 2010 and Medicare Part A since 2008. This requires more money from the GF to makeup the shortall by redeeming the IOUs in the HI and SS trust funds. And the costs for these programs are going up faster than inflation. Add to that an aging population as the baby boomer population starts to retire--like a pig thru a python.
Add to the 57 million on SS and 47 million on Medicare another 70 million on Medicaid and 48 million on food stamps. Leaving aside the double dippers, there is an enormous part of the population that receives a government check--about one in every two. Do you think any politician can ignore these numbers and survive?
We must balance our budget eventually, but there is no way we cannot raise our debt ceiling in the short term. Two thirds of the budget is on automatic pilot with entitlements, other "mandatories," and debt servicing costs increasing without the need for explicit Congressional approval--for the most part. All the tax revenue collected covers just this portion of the budget. You are not going to make the necessary changes to these programs overnight.
The GOP must use the debt ceiling increase as a lever to get entitlement reform, including a government shutdown if necessary, but there is no way we can keep the current debt ceiling in place.
And then there is this. Government spending at all levels accounts for about 45% of GDP. There are so many people, businesses, public employees, etc. that any immediate, large reduction in government spending would send the economy into a tailspin decreasing tax revenue and increasing the need for more government assistance. We see this playing out in Greece with the EU calling for more and more austerity measures, which have increased unemployment to more than 25% and decrease revenue. It is the formula for a death spiral.
So far, our political betters have postponed making the hard and painful decisions necessary to change course. Both parties are addicted to spending and the public rewards them with reelection. I blame the voters most of all because they are unwilling to accept any cuts to things like SS and Medicare. We have created a culture of dependency and big goverment. Is there the political will to get off of this tiger. Count me as skeptical. It may well take a collapse ala Greece to get the American people's attention to the fact that the welfare state is unsustainable.