To date, most budget projections have not been very accurate. In the late 1990s, there were projections of huge surpluses in the years to come. Funny thing happened, though - the economy slowed down starting in 2000 (like it does every 10 years or so), so the forecast revenues didn't materialize. Unfortunately, spending growth rates just kept on rising. It's kind of funny how that side of the deficit equation keeps getting ignored.

Here's a pretty gloomy assessment from the Concorde Coalition, a bipartisan anti-deficit organization. From the paper (emphasis added):

Vicious Dynamic

If today’s deficits were a strictly temporary phenomenon, they would be less worrisome. But in fact, the deficit outlook rapidly deteriorates just beyond the official ten-year budget horizon.

The reason, of course, is the looming expense of caring for an aging population. Over the next decade, the current-law cost of Social Security, Medicare, and Medicaid is due to grow by a little over 1 percent of GDP. But from 2013 on, the cost will be growing by 1 percent of GDP every three and one-half years. All told, spending on the three programs will rise from 8.5 percent of GDP today to 14.9 percent in 2030 and 18.4 percent in 2050—and that’s without a drug benefit.

How big will the deficit impact be? To answer the question, the Concord Coalition and its co-hosts extended their near-term projections using the same kind of model the GAO uses. The results are sobering: The deficit, which is projected to hover between 3 and 4 percent of GDP over the next decade, suddenly begins to rise in 2014, hitting double digits by the mid-2020s. The public debt explodes in tandem—to 100 percent of GDP by the late 2020s, 200 percent by the late 2030s, and an impossible 400 percent by the late 2040s. The peacetime record among modern industrial nations is about 150 percent of GDP.

The accompanying figures depict the vicious dynamic that generates these projections: rising federal expenditures, which increases the deficit, which increases the debt, which increases interest costs, which pushes up expenditures even further.

The coming danger isn't from military spending, it's from social spending that can't be supported. Instead of facing that risk, the Congress and Bush are pushing for even more social spending, namely a prescription drug benefit that's optimistically projected to cost $400 billion over 10 years. Of course, when Medicare was established in the 1960s, it's 1990 cost was forecast to be $9 billion. The actual figure was over $60 billion. Take the projected costs of any new program with a grain of salt (but not if you're prone to high blood pressure).

Demographics, it is said, are destiny. With a rapidly aging population, the promised benefits that exist today are unsustainable, much less adding new benefits. Like the old line, "when you find yourself in a hole, the first thing you should do is stop digging."