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View Full Version : We're in trouble. It's a lot worse than you think.


Spence
11-15-2005, 03:47 PM
The comptroller general of the United States is explaining over eggs how the nation's finances are going to hell.

"We face a demographic tsunami" that "will never recede," David Walker tells a group of reporters. He runs through a long list of fiscal challenges, led by the imminent retirement of the baby boomers, whose promised Medicare and Social Security benefits will swamp the federal budget in coming decades.
...
To hear Walker, the nation's top auditor, tell it, the United States can be likened to Rome before the fall of the empire. Its financial condition is "worse than advertised," he says. It has a "broken business model." It faces deficits in its budget, its balance of payments, its savings and its leadership.

Walker's not the only one saying it. As Congress and the White House struggle to trim up to $50 billion from the federal budget over five years just 3% of the $1.6 trillion in deficits projected for that period budget experts say the nation soon could face its worst fiscal crisis since at least 1983, when Social Security bordered on bankruptcy.

Without major spending cuts, tax increases or both, the national debt will grow more than $3 trillion through 2010, to $11.2 trillion nearly $38,000 for every man, woman and child. The interest alone would cost $561 billion in 2010, the same as the Pentagon.
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Budget watchdogs cite these looming problems:

Prescription-drug coverage under Medicare takes effect Jan. 1. Its projected cost, advertised at $400 billion over 10 years when it passed in 2003, has risen to at least $720 billion. "We couldn't afford" it, Walker says of the new law.

The leading edge of the baby boom hits age 62 in 2008 and can take early retirement. The number of people covered by Social Security is expected to grow from 47 million today to 69 million in 2020. By 2030, the Congressional Budget Office projects, Social Security spending as a share of the U.S. economy will rise by 40%.

The bulk of Bush's 10-year, $1.35 trillion tax-cut program is set to expire at the end of 2010. But Congress is moving to make the reductions permanent. That would keep tax revenue at roughly 18% of the economy, where it's been for the past half-century too low to support even current spending levels. "We can't afford to make all the tax cuts permanent," Walker says.

Baby boomers begin to reach age 65 in 2011 and go on Medicare. Of all the nation's fiscal problems, this is by far the biggest. If it grows 1% faster than the economy a conservative estimate Medicare would cost $2.6 trillion in 2050, after adjusting for inflation. That's the size of the entire federal budget today.
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Inaction could have these consequences, experts say: Higher interest rates. Lower wages. Shrinking pensions. Slower economic growth. A lesser standard of living. Higher taxes in the future for today's younger generation. Less savings. More consumption. Plunging stock and bond prices. Recession.Source (http://www.usatoday.com/news/washington/2005-11-14-fiscal-hurricane-cover_x.htm)

akhhorus
11-15-2005, 03:56 PM
Why do I think the solution that will be proposed by the government will involve Soylent Green?

BurgundyNGold
11-15-2005, 04:37 PM
I don't think this is being understated at all. The 21st century may very well not be an American century. In fact, it may well see our economic decline under the burden of internal cash commitments and slowed economic growth. This is a problem that both sides continue to guffaw and sweep under the rug, but the sooner this gets addressed, the better it is for the US.

Unfortunately, people won't elect a bad news, git 'er done candidate as long as there is a pie in the sky, "shining city on the hill" alternative. There will need to be wholesale changes to the way we do business in the government if we are to meet our commitments to the boomers without bankrupting the country. The problem is, too many boomers have demonstrated that they're selfish enough to let the country sink, so long as they get theirs.

RedskinsDave
11-15-2005, 05:01 PM
While no one is declaring a state of wealth, Walker is well known as the head Chicken Little in the government and has been telling us the sky is falling for many years, even under Clinton.

Equal parts Chicken Little and Cassandra, the mythological oracle who saw doom ahead but couldn't get anyone to believe her, Walker trots out frightful numbers to make his case.



http://www.forbes.com/business/forbes/2005/0815/042.html

thickskin
11-15-2005, 09:28 PM
While no one is declaring a state of wealth, Walker is well known as the head Chicken Little in the government and has been telling us the sky is falling for many years, even under Clinton.

Equal parts Chicken Little and Cassandra, the mythological oracle who saw doom ahead but couldn't get anyone to believe her, Walker trots out frightful numbers to make his case.




http://www.forbes.com/business/forbes/2005/0815/042.html

hilarious that the author has to explain cassandra and not chicken little

BurgundyNGold
11-15-2005, 09:33 PM
hilarious that the author has to explain cassandra and not chicken little
LOL, that is pretty funny.

redskin_rich
11-15-2005, 09:37 PM
hilarious that the author has to explain cassandra and not chicken little
Well, no movies were made about Cassandra, at least recently, and she is not a well known character in Greek Mythology.

Redskin Scott
11-15-2005, 11:14 PM
The entire compound interest scam has to crash, as it's unsustainable. This should come as no surprise. All the Beltway crooks can do now is to print ever more worthless FRN's and forestall the inevitable collapse, while making their offshore escape plans in earnest.

My advice: buy some gold, buy more silver, get out of debt completely, learn to grow your own vegetables and fruit, and learn how to use a centerfire rifle.

thickskin
11-16-2005, 12:27 AM
Well, no movies were made about Cassandra, at least recently, and she is not a well known character in Greek Mythology.

you're right. i just meant that it was a telling morsel of social commentary and appropriate vis-a-vis the decline-and-fall tone of the prognosis.

Spence
11-16-2005, 08:15 AM
It's worth pointing out that Walker is hardly the only person singing this song. As the story indicates, these same warnings are being sounded by budget analysts on the left and the right.