S foreign poli by the public which includes foreign creditors i quarters of US

S foreign poli by the public which includes foreign

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emotely appreciated in today's U.S. foreign-poli by the public, which includes foreign creditors, i -quarters of U.S. GDP, the highest it has ever be rld War II. Moreover, the drivers of the debt are mous costs indefinitely. TRIES SOURCE: PRICEWATERHOUSECOOP her than of global power factors. By both percent in 2010 over the same y as well. debt and deficits. n in the world icy debates. The is approximately een except for a e entitlement PERS
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Today, well over 60 percent of federal revenue is consumed by spending on Social Security, the major health-care programs (including Medicare, Medicaid, and subsidies under the Affordable Care Act), and interest payments on the federal debt. By 2043, spending on entitlements and net interest payments will consume all federal revenue, according to the Congressional Budget Office. Every dollar the U.S. government spends on anything else -- defense, intelligence, foreign affairs, the federal justice system, infrastructure, science and technology, education, the space program -- will be borrowed. And by that time, the total federal debt held by the public will far exceed U.S. GDP. Recent attempts to address the problem have only resulted in fiasco. The "sequester" imposed automatic, arbitrary, across-the-board cuts to discretionary spending -- precisely the spending that is not causing the fiscal problem -- with the heaviest burden falling on defense. Most spending for entitlements was untouched. One could hardly imagine an outcome more likely to reduce American power, and quickly. The unwillingness to choose a sustainable fiscal path is forcing the United States to forgo the investments necessary to sustain the domestic sources of its power, and it is already eroding its strength abroad. Among allies, adversaries, and swing states alike, U.S. fiscal policy is increasingly calling into question America's ability to lead globally. For all these challenges to its influence, the United States retains enormous potential strength. Far more so than other great powers, it has the advantages and resources -- political, economic, geographical, geologic, and cultural -- to maintain the greatest freedom of action over the long haul. But it needs to focus on its competitiveness, beginning with a few key priorities. Because America's fiscal policy affects everything else and because the current trajectory is unsustainable, entitlement reform is inevitable. The only question is when it will begin. A number of the fixes that could have the most significant impact are straightforward and could be phased in over time with minimal disruption. For example, increasing the retirement age -- which could be done over a decade or longer -- would substantially improve America's fiscal condition. Investing effectively in infrastructure -- long a U.S. comparative advantage, now increasingly a relative weakness -- would boost productivity and growth over the long term. So would reforming corporate tax laws to encourage companies to bring profits home. (The current system creates perverse incentives for companies to maximize tax advantages by keeping profits out of the United States.)
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