Economic Meltdown..Do you really give a DAMN ?

David Walker is not a politician. He was hired by Bill Clinton to head the GAO. His official title was: Comptroller General of the United States and head of the GAO. He was the nation's chief accountant. He was not an elected official and was hired for 15 years regardless of which president or political party was in office, which means he was in office during both Bill Clinton and George W. Bush.

Walker has been preaching of impending fiscal doom for some time now. It is his premise that there is not enough money to pay future retirees their full Social Security and Medicare benefits and unless something is done immediately, our country may not survive.

Walker felt so deeply about this subject that he quit his job in march 2008 to join the "Peterson Foundation" where he now spends all his time traveling the country warning Americans of the impending fiscal melt down of our economy. On his staff are Republican, Democratic, and Independent economists. His message is about as non-partisan as it can get.

I trust his judgment because David Walker has no political agenda. He has nothing to gain by lying to the American public. He is not running for an office and according to him, doesn't intend to. He claims to be an Independent and as such, says what needs to be said and doesn't care if it offends either party.

Of all the experts I have seen in high government positions, I believe that Walker is one of the few people who is not limited by the party to which he belongs. He cares more about the problem, and its solution, than any elected official can. The solutions he proposes go against the core beliefs of both political party bases.

Yes...I am proud to be a Democrat, but I am not a follower and will go against the party line, if need be, when I believe the party is wrong on any issue. On this issue, I do believe that the Democratic party is to damn stubborn to see that they can not solve this problem alone and, as revolting as it may be, they need the Republican party.

Look at it this way...For 50 years both Republicans and Democrats have squandered excess SS money that should have been invested for retirees future, but instead they had to borrow this money to fulfill election promises, not giving a damn about what that meant to future generations.

GAO on Social Security:
There is No Trust Fund, Only IOU's

Here's another way to think about the problem. Social Security is a commitment by the government to make payments to people in the future. The Trust Fund exists, supposedly, to secure that commitment by setting money aside today — so that in the future, the money doesn't have to come from taxes, borrowing, or spending cuts. Fine — in principle. But when that money is invested in Treasury bonds, those bonds themselves will have to redeemed in the future, and the money to do that will have to come from taxes, borrowing, or spending cuts.

And guess where that money is coming from. Instead of investing our money into things that can be immediately converted back into cash when needed, they left us IOUs and promises that it would be paid back. Well guess what...payment is coming due and there is no cash, just IOUs. Seniors can not eat IOUs. IOUs can not provide medical care. The actual money to redeem these IOUs will have to come from somewhere, and guess where that is: higher taxes AND reduced benefits.

The last line above shows exactly where the problem is. I can not see a Democratic platform demanding "reduced benefits" or a Republican platform demanding "higher taxes"". Unfortunately, the solution to this problem will require both. That is why politicians on both sides of the aisle refuse to take this issue head on. Politicians know that their party alone can not solve this problem and that the ultimate solution will require them to embrace ideas from the other party. Therefore they ignore it and the problem continues to grow and be passed along to the next generation.

Social Security and Medicare Boards of Trustees
Status of the Social Security and Medicare Programs
A SUMMARY OF THE 2008 ANNUAL REPORTS

General
The financial condition of the Social Security and Medicare programs remains problematic. Projected long run program costs are not sustainable under current financing arrangements. Social Security's current annual surpluses of tax income over expenditures will begin to decline in 2011 and then turn into rapidly growing deficits as the baby boom generation retires. Medicare's financial status is even worse.

Medicare
The Medicare Report shows that the program could be brought into actuarial balance over the next 75 years by an immediate 122 percent increase in the payroll tax (from 2.9 percent to 6.44 percent), or an immediate 51 percent reduction in program outlays or some combination of the two. As with Social Security, adjustments of greater magnitude would be necessary if changes are delayed or phased in gradually. Larger changes would also be required to make the program solvent on a sustainable basis beyond the 75-year horizon.

Social Security
Social Security could be brought into actuarial balance over the next 75 years in various ways, including an immediate increase of 14 percent in payroll tax revenues (from 12.4 percent to 14.1 percent) or an immediate reduction in benefits of 12 percent or some combination of the two. Ensuring that the system is solvent on a sustainable basis beyond the next 75 years would require larger changes,

Conclusion
The financial difficulties facing Social Security and Medicare pose enormous challenges. The sooner these challenges are addressed, the more varied and less disruptive their solutions can be. We urge the public to engage in informed discussion and policymakers to think creatively about the changing needs and preferences of working and retired Americans. A national conversation and timely political action are essential to ensure that Social Security and Medicare continue to play a critical role in the lives of all Americans.

There are no future generations to pass this problem on too. We must begin to solve this problem now or our entire economy will collapse within the next 30-40 years. Politicians have kicked this economic can down the road for 50 years leaving it to someone else to solve. Well, the road has run out and there is no where else to kick this can to. Barack must start the process and make the hard choices that will eventually save America.

The Nation’s Long-Term Fiscal Outlook
April 2007 Update
Federal Fiscal Policy Remains Unsustainable

At some point, action will be taken to change the Nation’s fiscal course. The longer action to deal with the Nation’s long-term fiscal outlook is delayed, the greater the risk that the eventual changes will be disruptive and destabilizing. Acting sooner rather than later will give us more time to phase in gradual changes, while providing more time for those likely to be most affected to make compensatory changes.

This gap is too large for us to grow our way out of the problem. It would require decades of double-digit real economic growth, but the U.S. has not had a single year of double-digit real economic growth since World War II. To be sure, additional economic growth would certainly help the Nation’s financial condition and our ability to address our fiscal gap, but it will not eliminate the need for action.

Hell...I'm 60, why should I give a damn about a problem that probably won't affect me or my chances of getting benefits? The odds are I'll be dead in 30 years. The answer to that is obvious. Every time I look at my children, and especially at my grandchildren, I wonder what their futures will be like? Will they even have a future? Will they have the opportunities that I've had or will they live in a third world country where the majority of the population lives in poverty. Where pain and suffering are the norm? I see this as a possibility, unless things change. To me, these questions are bigger than both the Democratic and Republican parties and their one-upmanship partisan politics.

So what do we do ?? Increase taxes through the roof? Cut the military back to nothing ?? Cut the benifits of ALL social programs even more?? Increase spending from the general fund even more ?? Borrow even more money from China and other countries ?? The answer to most of these questions is probably..YES !!! BUT there is not a politician in this country, with hopes of being elected to public office, with the guts to tell us this.

Neither party alone has been able to fix this problem because of partisan politics and have more or less ignored it, because their party can not provide a total solution. Therefore, IMHO, logic suggests, that alone, they never will. This problem was caused by both political parties. For either party to blame the other is a stupid waste of time and accomplishes nothing. It will require elected officials on both sides of the aisle to hold their collective noses, work together, and make hard decisions that no one likes, but are necessary. The longer they wait, the less likely it is that this problem will ever be solved and the more likely it is that our nation may not survive.

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As always, Here is a link to my main diary on the subject

Meta: 

Comments

Social Security is the least of our worries

Medicare, our monstrous trade deficits, our lack of savings, and a government that uses bogus wars to distract the public, are our most immediate concerns.
If we can't deal with these issues then this country will be doomed long before Social Security collapses.

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I agree SS is not a problem now

but in 2014, or so, it will be. It will become more and more of a problem every year thereafter. Medicare is a much more immediate problem because this year marks the 1st year that it can not totally pay for itself. The additional funds it needs to cover expenses will have to come out an already strained General Fund, and like SS as the years pass its economic impact could be disastrous.

There is a "perfect economic storm" brewing. It not only includes all the Social programs (Social Security, Medicare, and Medicaid) but the ever increasing National Debt and Deficit, Devaluation of the dollar, loss of jobs, loss of corporations, banking defaults, and on an on. Pick your own economic indicator to add to the list. There is NO good, long term, economic news out there.

In the coming years, all of these will require an ever increasing level of funding, far beyond what taxes will generate. So far, we've been suplimenting the shortage by borrowing money from Government Trust funds and foreign countries.

Borrowing is not an issue at the moment. Most economists agree that the current level of borrowing is not unprecidented and is managable. What they don't seem to understand is that, unlike past similar situations, this one is only going to get worse. There is nothing in our economic future that can prevent this problem from escalating out of control.

Everyone of them is on the decline and their is NOTHING from stopping them from getting worse. The Republicans are banking on economic growth, but how can we have economic growth when we are losing jobs and corporations are moving overseas daily. Our ability to manufacture anything is being stripped.

This country was built on the backs of people working in manufacturing. The Republican don't seem to give damn if our entire manufacturing base disappears.

BUT these lowly mill and manufacturing workers are the brakes that have always stopped an economic decline.  Republicans are killing the goose that has time and time again laid our golden and egg and kept this country afloat.

There is no free lunch and unless someone can explain to me HOW we are going to pay for everything we've promised the American people with an ever decreasing economy, then I'm going to remain scared, really scared.

 

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TKH

Walker on social security

I did them in a Friday Movie Night. Look at his social security graph and he shows the funds are there, but simply stolen by Congress for other programs.

It's Medicare/Medicaid and the costs that is the ultimate monster in the room.

I like Walker and I think his numbers are solid and the way the deficit is out of control, I agree with his "Dr. Doom" message.

That said, I question not cutting drastically the DoD budget, and the Iraq war has surely broken the bank.

I think they could not deny/reduce benefits if we got the lobbyists plain out of Congress who corrupt almost all good intentions, including social programs.

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My numbers may be off a little bit

but the two wars are currently only a small part of the problem. Together, their total cost is between $120-$140 Billion a year. From government Trust funds and foreign investors, we are currently borrowing $720 Billion a year. So even if you discount the wars, we are still borrowing about $580-$600 Billion bollars a year. That is just at TODAY's rate ($1.97 Billion per day). God only knows what it will tomorrow.

I don't know if you look at the "Debt Clock" or not. I have been watching it for the past year or so. When I started, we were borrowing about $1.34 Billion per day. One year later (today) it is up to $1.97 Billion per day. I have watched the daily amount being borrowed getting larger and larger, at an ever increasing rate.

Where will it stop?
When will it stop?
WHY will it stop?

What will happen if those foreign countries lending us money decide that we are no longer a good investment and try to cash in the $2.5 Trillion worth of Treasury Bonds they hold?

I have heard people say, "they won't do that". My respose is BULLSHIT. Who needs bullets when they can bring down the "American Imperialists" with one fell swoop of the pen. They are still a Communist country and unlike America, their government totally controls their financial section, not the other way around, as it is here.

Whatever our government is going to do....THEY BETTER START ON IT SOON !!!

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TKH

Welcome to EP THK!

Glad you're over here and being a bloggin' fool!

BTW: I don't know if you meant to do this but you voted your own blog post down (little arrow on the bottom left of your post) and watch out because those voting things move content around the site so users control the front page by consensus! ;) Somehow I don't think you meant to say you don't want your own blog on the front page. ;)

Over on the left is a user guide and we're so small and there is an email system, so I answer questions on the technical end, no problem.

Welcome!

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Hi Bob

You got me here. I had to go find your last comment on one of my diaries where you mentioned this blog.

No...I didn't mean to screw my own diary and YES...I'd love to have a diary on the front page.

I imported the diary, as is from Kos, and was suprised to see that all the html wouldn't work. Any suggestions on how to convert to this site easily?

Thanks

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TKH

compatibility with other sites

I suspect that you accidentially toggled to the rich text editor, which won't work. That's a WYSIWYG and does the HTML formmatting "for you" so if you put in tagged HTML code it will reformat it to display the actual HTML code.

all of the tags from DK should work on here, but that's formatted correctly. They have correcting code as I do (software to correct badly formed HTML tags) but there might be differences but that would be if there are errors.

This site is full XHTML (and I have it set you can use HTML but XHTML is the official format). DK and all Soapblox sites, are a limited subset of HTML. So, anything you can post there should be a straight cut and paste over here.

Over on DK, you have to go into edit and then hit copy. Then while in the plain text editor here paste.

If you toggle the rich text editor that would interpret all XHTML/HTML tags, thus display the HTML code along with the text.

The body comes up in plain text editor on default.

Also, if you cross post there are a few things such as link over to EP (the code is in the user guide) and change your title just a tad and possibly the 1st sentence. I'm all for cross posting but ya gotta fake out the aggregators. They will punish websites who has identical content and bury them in rankings. By changing the title, putting a little "cross posted on the Economicpopulist" link and the first sentence, that is enough to fake out those various ranking engines.

I looked over your revisions and I didn't see anything that looked messed up, although you need to format your links.

Here's the user guide which has examples on formatting as well as how to use the rich text editor and so on.

DK doesn't have a rich text editor, i.e. two different edit modes from which to choose from to write a post, so I suspect (since you hit the vote yourself off the front page button! ;)) you hit the "switch to rich text editor" mode too.

Just email me. There is a private check box which works like drafts on DK. Check that and only you and then myself (since I'm the admin) will be able to see what you're working on.

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Thanks

I figured it out and reposted using html from DK. Looks a lot better...thanks.

One other question: When I log in I have no content on the left half of the screen (where front pagers publish in DK). I have to scroll all the way down, to the bottom of the blog/diary list on the right, to see anything.

Can I correct this ??

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TKH

ut oh

Are you using ie6? I have a bug which I haven't been able to track down.

If so, use firefox, as far as I know the only display bug I have is with this look, on ie6. But if there are display bugs like that, please email me!

Also, in "my account" you can change the look of the site to a blue theme. That doesn't have the ie6 bug.

Email me off line because I have periodically gone looking for that damn bug in ie6 and I don't have that browser/OS combination (I believe it's ie6/w2k) to hunt it down.

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SS

Social Security is one of the most successful and lasting legacies of the New Deal. It lifted senior citizens out of poverty. Again it is widely touted as one of the most successful government programs ever. Perhaps that is why the anti government "free" market crowd wants to take it down - it daily disproves their ideology.

With the shift away from traditional defined benefit pension plans and toward the volatile 401K plans social security becomes more important than ever. A 401k is simply not going to be enough to help someone live a secure retirement. . 401ks are simply too dependent on the economy and the stock market - if the market is down when you are ready to retire your 401 k could drop huge amounts of value. In the big drop off in 2001 when the first Bush recession hit mine dropped almost half its value and took the next 5 years just to catch back up - instead of earning value. The old line that "my 401k is now a 201k" was no joke.

Had we Al Gore's much ridiculed "lock box" preventing congress from raiding the funds for other things such as wars we wouldn't even be talking about a SS "crisis"

Even Greedspan admitted that it would actually be fairly easy to correct any future shortfall of SS with any or combination of the following - rolling back the Bush tax cuts, raise the salary cap, or shift the retirement age a few years back = which is already happening anyway as people reach retirement age and find they do not have enough money to retire and continue working either full or part time.

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Social Security

is not a problem now, but will be more so in the coming years. It is but a small portion of the "Perfect Storm" forming around our financial institutions and our economy as a whole.

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TKH

solutions

Health care is the one that really bothers me. look at these OECD graphs on costs in the United States vs. other nations and they have almost all single pay health.

It's costs. What I fear with their data is that it will be used to cut much needed social/public benefits when ...well let's see the estimates of how much rip off is going to corporations via the taxpayer?

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Switched to blue

and it works. What is your email address and I'll send you a screen shot of what the other looks like.

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TKH

yes...I am using ie6.

I changed it to blue and it works. Actually, I like the blue better.....thanks

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TKH

we aim to plz

email system is incorporated on this site. You can email anyone. For me (admin) hit the contact button.

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