Whoever wins this year’s US election, the combined effect of three events – the expiry of former president George W. Bush’s tax cuts, a renewal of the legally binding limit on federal borrowing and a Congressionally mandated sequester, a mechanism that will automatically cut domestic spending in 2013 – will force the president and Congress to engage deeply with fiscal issues. The decisions made will do much to determine the country’s future.

For many observers, the central question in debates over deficit reduction is what can be done about entitlements. Growth in spending associated with an ageing population will be the major factor fuelling the growth of federal spending.

The rising number of retirees to workers means that Social Security benefits at the current ratio to wages and salaries will not be sustainable without some kind of tax increase. Sooner or later revenues will have to rise or outlays will have to be curtailed.