Baker said that while the federal budget is not out of control, the long-term picture for the deficit starts and ends with how we fix health care, something he noted has not been adequately raised on the national stage. Paying it short-shrift is “a recipe for disaster,” he said. Baker noted we spend more than twice as much on health care costs per person than do many nations with a higher life expectancy. He also said we have to fix health care or we will truly face an unimaginable deficit problem.
Baker explained that the nation’s current financial problems are the result of the burst housing bubble, which sent the economy into its downturn. He painted a stark picture of how this devastated the savings rate of Americans: People who were spending money based on their housing wealth stopped spending when their houses lost value, and the savings rate fell to zero between 2002 and 2007.
More government stimulus is how to get the economy moving forward, he said.
In touting the stability and longevity of Social Security, Baker told the B’nai B’rith conference that experts agree the social program could continue to be fully funded through 2039 even if we do nothing to it. This is contrary to most Americans’ perception of the program’s solvency.
That is why Baker said the recent suggestions from the leaders of the Commission on Fiscal Responsibility and Reform to reduce Social Security benefits, something that would heavily impact near-retirees, is so damaging.
Many will not have the value of their homes to fall back on for income and Social Security could be their major, and in some cases only, source of income.