Here's your nightmare fuel for the day:
"An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?"
The IMF crunches the numbers and warns that only huge tax increases and entitlement cuts can save America.
Under most scenarios, the fiscal adjustment needed to eliminate the fiscal and generational gaps would entail significant adjustments in taxes and/or transfers. Under the baseline scenario, for example, the federal government can restore fiscal balance by raising all taxes and cutting all transfer payments immediately and for the indefinite future by 35 percent.
Were the U.S. government to finally repeal the tax cuts enacted in the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), the Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA), and were the IPAB to succeed in curbing healthcare spending growth as provided in the IPAB mandate, reining in the fiscal gap would still require an immediate and permanent increase in all taxes and cut in all transfers of 26 percent.
If some Hill staffer prints out the 39 pages of this and puts it on his/her desk, that's as far as any discussion of tax increases will get in Congress. The very serious discussion we're about to have about spending will start and end with entitlement cuts -- if we're lucky. If you paid any attention to the 2010 campaign, you'll recall that Republicans promised to stop all tax increases and
restore funding to Medicare
. Of course, the Republican argument is that tighter fiscal policy and lower taxes will create another economic boom that allows the economy to grow right out of these projections.