US Candidates Ignore Looming Debt Crisis

code_rage writes "Carolyn Lockhead of The San Francisco Chronicle has written an article about one of the most important, but overlooked, political issues we are facing. Baby-boomers will soon begin retiring, which will result in a huge fiscal imbalance (deficits and debts). The article says that the present value of the anticipated debt is estimated to be between $40 trillion and $72 trillion, depending on the source. To put that in perspective, the current national debt is $7.3 trillion.""

Former Treasury Secretary Paul O'Neill commissioned a study (free PDF) that was written by Jagadeesh Gokhale and Kent Smetters. To give a sense of how serious the fiscal imbalance is, consider some of the painful measures that the study said would be necessary to balance the books:
- More than double the payroll tax, from 15.3% to 32% of wages
- Raise income taxes by two thirds
- Cut Social Security and Medicare benefits by 45%
- Eliminate all "discretionary" spending (including such constitutionally mandated government functions as the military and the judiciary)

Peter G. Peterson has written a book about the issue: "Running On Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do about It." He recently gave an interview at the Council on Foreign Relations. He prefers to express the issue in terms of cash flow, because Social Security and Medicare are "pay as you go" systems (there is essentially no trust fund). The cash flow impacts will be an estimated $783 billion in 2020, increasing to trillions later.

Peterson offers some concrete proposals in the interview, and offers some political cover to the candidates in saying "I have never thought that a political campaign is an optimum environment for serious discussion or practical proposals.

You can protect your money

[roystgnr]

The problem is, if they do not get it under balance, the dollar will plummet, and then loose value as people loose faith in it.

The trick to surviving such a crash is to choose investments that aren't tied to the value of the dollar. We're advising our clients to put everything they have into canned food and shotguns.

What will we do?

[clambake]

How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do about It.

Quite simple realy... We'll wait until they are all old and feeble and then stop paying for them. It's cruel, but they brought it on themselves.

Advice to Boomers

[rlp]

A fellow boomer gave me pertinent advice that I feel obliged to share. Given the state of Social Security, corporate retirement plans, and post-dotcom bust 401K's, he recommends the following strategy: "Once a week eat a can of cat food. That way, by the time you retire, you'll be used to the taste".

Re:Social Security, etc...

[Geoffreyerffoeg]

This is a program that, at its heart, is truly Christian

So of course, we must cancel Social Security to enforce separation of church and state! The government cannot be allowed to do good works or help people! They must be evil like...oh wait, Satanism's a religion, too? curses. ;-)