Social Security and Medicare are two of the largest government programs and they are expected to have ballooning costs in the years ahead, as healthcare costs continue to rise, and Baby Boomers reach retirement age. "Indeed, if one looks at Social Security and Medicare together, including both Medicare's hospital and physician programs, they go from a modest combined cash-flow deficit of about $25 billion in 2003 to an unthinkable annual cash-flow deficit of $783 billion in 2020." (16).

While the present deficits in the hundred of billions of dollars, and debt around 9 trillion dollars, are certainly not small, the truly enormous numbers come in looking at the federal government's future commitments (e.g.:entitlement programs like Social Security) in comparison to expected tax revenues into the future.

"[The International Monetary Fund points] to a huge and growing imbalance between what the federal government has promised to pay in future benefits and what it can reasonably expect to collect in future taxes. Its long term structural deficit now exceeds 500 percent of gross domestic product. Closing that gap, the IMF calculated, 'would require an immediate and permanent 60 percent hike in federal income tax, or a 50 percent cut in Social Security and Medicare benefits.'" (17)

In fact, even the President's 2006 Budget overview recognized and acknowledged that in its present for Social Security "has made promises to young workers that it cannot keep."

Federal law requires private corporations to calculate future liabilities such that the costs are spread over the preceding years. This is called amortizing. The general idea is to prevent private companies from misrepresenting their financial condition by pushing expenses into future years. The federal government, however, does not require itself to comply with the same standards. Total unfunded liabilities, including future Medicare and Social Security benefits, amounted to $21 trillion in 2004. "Thus, if Congress had to abide by its own rules, it would have to throw itself in jail for fraudulent accounting." (18).

A substantial portion of the expected increase in deficits for Medicare and Social Security stem from the 'aging' of the population. " Our nation is about to undergo an unprecedented demographic transformation - with no idea of how to pay for it. The coming age wave is not a temporary challenge that will recede once the baby boom generation passes away. The boomers' retirement is ushering in a permanent transformation to an older population--and a permanent rise in the cost of programs such as Social Security, Medicare and Medicaid, which already comprise 42 percent of federal government spending. (19)

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Earmarking or "Pork" spending