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Chairman Kerrey, Vice Chairman Danforth, and Members of the Commission, I appreciate the opportunity to appear here today to discuss the nature of the entitlement problem facing our nation and the context for reform. I want to commend the Commission for keeping the public's attention focused, in a responsible way, on the important issue of entitlements. With recent declines in the federal budget deficit, it would be tempting to turn away from the politically divisive discussion of benefit reductions and tax increases in the false hope that the deficit will just go away by itself.

My statement today discusses three topics:

• The relationship between federal budget deficits, entitlements, and future living standards;
  
  
• The nature of entitlements and the reasons they will contribute to rapidly growing deficits in the future; and
  
  
• The importance of acting soon to address the entitlement problem.

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