Silicon Valley has a new pitch for Washington: Artificial intelligence will solve all your budget problems. Industry leaders claim the technology will turbocharge productivity growth, generate a flood of new tax revenue, slash the cost of delivering government services, and perhaps even bend the curve on Medicare and Medicaid spending. Deficits will shrink. The likelihood of a debt crisis will melt away, as technology accomplishes what politicians couldn't. In the words of Elon Musk, AI and robotics are "the only thing that can solve for the debt situation."
Politicians, desperate for any exit from their self-imposed fiscal catastrophe, are listening. The "easy answers" of simply cutting waste, defunding immigrants and foreigners, taxing the rich, or slashing defense spending are woefully insufficient to address budget deficits on track to hit 9 percent of GDP within a decade and 14 percent of GDP within three decades under current policies. Closing deficits of this magnitude would require an aggressive combination of Social Security and Medicare reforms with new broad-based taxes—unless Silicon Valley can produce an AI-based economic miracle that lets Americans continue collecting exorbitant government benefits at relatively low tax rates.
