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Title: Comptroller General Of The US: "We Face A Demographic Tsunami That Will Never Recede"
Source:
USA Today
URL Source: http://www.usatoday.com/news/washin ... 4-fiscal-hurricane-cover_x.htm
Published: Nov 14, 2005
Author: Richard Wolf
Post Date: 2005-11-15 13:38:21 by Uncle Bill
Keywords: Comptroller, Demographic, General
Views: 272
Comments: 32
USA Today 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. The breakfast conversation remains somber for most of an hour. Then one reporter smiles and asks, "Aren't you depressed in the morning?" Sadly, it's no laughing matter. 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. From the political left and right, budget watchdogs are warning of fiscal trouble: •Douglas Holtz-Eakin, director of the non-partisan Congressional Budget Office, dispassionately arms 535 members of Congress with his agency's stark projections. Barring action, he admits to being "terrified" about the budget deficit in coming decades. That's when an aging population, health care inflation and advanced medical technology will create a perfect storm of spiraling costs. •Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, sees a future of unfunded promises, trade imbalances, too few workers and too many retirees. She envisions a stock market dive, lost assets and a lower standard of living. •Kent Conrad, a Democratic senator from North Dakota, points to the nation's $7.9 trillion debt, rising by about $600 billion a year. That, he notes, is before the baby boom retires. "We're not preparing for what we all know is to come," he says. "We're all sleepwalking through this period." •Stuart Butler of the conservative Heritage Foundation projects a period from now until 2050 in which tax revenue stays stable as a share of the economy but Medicare, Medicaid and Social Security spending soars. To avoid big tax increases, he says the government has to "renegotiate" the social contracts it made with its citizens. •Alice Rivlin and Isabel Sawhill of the centrist Brookings Institution put their pessimism into a book titled Restoring Fiscal Sanity. Rivlin, who became the first director of the Congressional Budget Office in 1974, says it will take an "economic scare" such as the 1987 stock market crash to spur action. Sawhill likens the growing gulf between what the government spends and takes in to a "Category 6 fiscal hurricane." 'The Fiscal Wake-Up Tour' They are the preachers of doom and gloom. Liberals and conservatives, Democrats and Republicans, they are trying to be heard above the ka-ching of the cash register as it tallies the cost of government benefits and tax cuts, Iraq and Hurricane Katrina. To raise their profile in recent months, several have traveled together to places such as Richmond, Va., and Minneapolis for what they call a "Fiscal Wake-Up Tour." Leon Panetta, former White House budget director and chief of staff to President Clinton, calls them "disciples of balanced budgets. ... And at some point, they'll be proven right." The White House and Congress are trying to address the nation's short-term budget deficits, but their response pales against the size of the long-term problem. President Bush proposed nearly $90 billion in savings over five years in his 2006 budget. He also tried to trim future Social Security benefits for wealthier recipients. The Senate this month approved $35 billion in savings over five years. House Republicans tried to save more than $50 billion last week, but objections from moderates stalled action. Either way, the savings could be wiped out by $70 billion in proposed tax cuts. The budget-cutting effort is being led by conservatives, who recoiled when Congress quickly voted to spend $62 billion after Hurricane Katrina struck New Orleans and the Gulf Coast. "Katrina served as a wake-up call," Walker says. In prior years, facing a less imminent demographic explosion, Congress cut in politically agonizing increments of $500 billion over five years. Bush's father gave up his "no new taxes" campaign pledge in 1990. After Ross Perot focused attention on the deficit in his 1992 presidential campaign, Clinton and the Democratic-run Congress raised taxes even more in 1993. Clinton and the Republican-run Congress forced two government shutdowns before agreeing on a deficit-reduction package in 1997. In each case, cutting the deficit backfired at the polls. The elder Bush lost re-election, the Democrats lost Congress, and Republicans' obstinacy helped Clinton win a second term. "The choices you have to make are almost exactly the opposite of what wins political elections," Panetta says. The problem is also easy for Congress to postpone because the day of reckoning is years away. This year's deficit was $319 billion, down $94 billion from the year before. That's 2.6% of the nation's economy, an amount easily borrowed from foreign investors. From 'Grenada' to 'Vietnam' But there is every reason to act — and soon. 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. "Social Security is Grenada," Holtz-Eakin says. "Medicare is Vietnam." 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. Some veterans of the deficit-cutting wars are pessimistic about avoiding disaster. "In the end, CBO and others are no more than speed bumps on the highway of fiscal irresponsibility," says Robert Reischauer, former Congressional Budget Office director and now president of the non-partisan Urban Institute. 'Where's Ross Perot?' The gloom-and-doom crowd hopes to avoid that fate. Increasingly in recent months, they are traveling the country, writing and speaking out about the need to cut spending, raise taxes — or both. The most outspoken is Walker, an impeccably dressed CPA whose 15-year term as head of the Government Accountability Office runs through 2013. He was a conservative Democrat, then a moderate Republican, and is now an independent. He's also a student of history, a Son of the American Revolution who lives on Virginia property once owned by George Washington. Walker's agency churns out reports with titles such as "Human Capital: Selected Agencies Have Opportunities to Enhance Existing Succession Planning and Management Efforts." But he knows he must try to humanize the numbers, and his rhetoric on the nation's fiscal course has become more acerbic. "Anybody who says you're going to grow your way out of this problem," Walker says, "would probably not pass math." Holtz-Eakin, a soft-spoken economist who said Monday he will leave CBO at the end of the year, takes a different approach. Less prone to giving speeches, he sees his role as a consultant and truth-sayer to Congress. "Numbers are the currency of the realm in Washington," he says, and most agree his agency has the best in town. But he concedes, "Sometimes it falls to the consultant to tell the client the bad news." Holtz-Eakin's father was in steel, a cyclical business rocked by strikes and shutdowns. "I thought, 'This is nuts. No one should live like this,' " he says. That explains why he wants the government to prepare for new demands on its New Deal and Great Society benefit programs. "The baby boom has been getting older one year at a time with a striking regularity," he says. MacGuineas is the outside agitator. An independent, she worked for Sen. John McCain's presidential campaign in 2000. She respects politicians who deliver bad news, as presidential candidate Walter Mondale did in 1984 when he said tax increases were inevitable — and then was defeated in 49 states. "I want to see a presidential election where the candidates are talking about what taxes they'll raise and what spending they'll cut," she says. "It's not always a winning campaign slogan." Conrad ran for the Senate in 1986 promising to reduce the budget deficit or quit after six years. By 1992, the deficit had hit an all-time high, and he said he would not seek re-election. Only the death of North Dakota's other senator kept him in Congress. The former state tax commissioner has been doing this longer than other congressional budget officials — and he has the most charts. He's so numbers-oriented that at baseball games, he can instantly compute a hitter's average after each at-bat. "Numbers speak to me in a way that they don't speak to others," he says. "I guess it's the way my brain is wired." Sawhill and Butler, from opposite ends of the political spectrum, lead a group of about 15 budget experts at Washington think tanks who gather periodically to discuss their dour crusade. Aided by Walker and the non-partisan Concord Coalition, a fiscal watchdog group, they have taken their show on the road. Butler, a native of Britain, witnessed there in the 1960s and '70s the effects of slow growth and high unemployment, driven partly by generous government benefits. "We have a responsibility" to start the debate, he says, "because we don't have to get re-elected." But Sawhill says it's "an indictment of our political leadership that it is being left to outside groups such as ours to put these issues on the agenda." After three decades in the business, Rivlin is frustrated by lawmakers' inaction and blames balanced-budget advocates for not better articulating the problem. "There may be better ways to talk about it," she says. "I sometimes think, 'Where's Ross Perot when we need him?' "
A 'fiscal hurricane' on the horizon
By Richard Wolf
November 14, 2005
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#2. To: Uncle Bill (#0)
Cripes!
Do you think that we may have just a bit of a problem in the country when the comptroller general of the United States states how the nation's finances are going to hell and says, "We face a demographic tsunami that will never recede," and the major media says nothing, the internet bloggers hardly talk about it, the print media, for the most part is silent, and Americans do not even have a clue, or care, or know what is going to happen. May God have mercy on us. And in His mercy may we hunt down these bastards responsible for it and cut their throats. Amen. "The burden of debt is as destructive to freedom as subjugation by conquest." "I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared." "No pecuniary consideration is more urgent, than the regular redemption and discharge of the public debt: on none can delay be more injurious, or an economy of time more valuable." Freeing the Nation from Debt "I consider the fortunes of our republic as depending in an eminent degree on the extinguishment of the public debt before we engage in any war; because that done, we shall have revenue enough to improve our country in peace and defend it in war without recurring either to new taxes or loans. But if the debt should once more be swelled to a formidable size, its entire discharge will be despaired of, and we shall be committed to the English career of debt, corruption and rottenness, closing with revolution. The discharge of public debt, therefore, is vital to the destinies of our government." "There is a measure which if not taken we are undone...It is to cease borrowing money and to pay off the national debt. If this cannot be done without dismissing the army and putting the ships out of commission, haul them up high and dry and reduce the army to the lowest point at which it was ever established. There does not exist an engine so corruptive of the government and so demoralizing of the nation as a public debt. It will bring on us more ruin at home than all the enemies from abroad against whom this army and navy are to protect us." "To preserve the independence of the people, we must not let our rulers load us with perpetual debt. We must make our election between economy and liberty, or profusion and servitude. If we run into such debts as that we must be taxed in our meat and in our drink, in our necessaries and our comforts, in our labors and our amusements, for our callings and our creeds, as the people of England are, our people, like them, must come to labor sixteen hours in the twenty-four, give the earnings of fifteen of these to the government for their debts and daily expenses, and the sixteenth being insufficient to afford us bread, we must live, as they now do, on oatmeal and potatoes, have no time to think, no means of calling the mismanagers to account, but be glad to obtain subsistence by hiring ourselves to rivet their chains on the necks of our fellow- sufferers." "No earthly consideration could induce my consent to contract such a debt as England has by her wars for commerce, to reduce our citizens by taxes to such wretchedness, as that laboring sixteen of the twenty- four hours, they are still unable to afford themselves bread, or barely to earn as much oatmeal or potatoes as will keep soul and body together. And all this to feed the avidity of a few millionary merchants and to keep up one thousand ships of war for the protection of their commercial speculations." "Our distance from the wars of Europe, and our disposition to take no part in them, will, we hope, enable us to keep clear of the debts which they occasion to other powers." No Mention of Fiscal Gap Estimated As High as $72 Trillion - It's All Over Lessons in how to make $43 trillion disappear HOW BIG IS THE GOVERNMENT'S DEBT? - $33.1 trillion+ $3,400,000,000,000 Of Taxpayers' Money Is Missing THE WAR ON WASTE - Rumsfeld Says 2.3 Trillion Dollars Missing The Baby Boomer's Retirement Bubble Is About to Burst? - CNSNews
#6. To: Uncle Bill (#5)
From Workforce Management: Behind the Wal-Mart Memo Our health care system is at a crossroads, and it is hard to see how Corporate America can continue to foot so much of the bill. By John Hollon nly in America can a company be vilified for having the temerity to suggest that it would be a good thing if it hired healthy workers. But that’s what happens if the company in question is Wal-Mart, and when the point about healthier employees is just one suggestion in a larger discussion about how the company can cut rising employee benefit costs. It’s easy to beat up on Wal-Mart because it is big and successful, and has gotten that way in large part because of its hard-nosed business practices. As philosopher and basketball legend Wilt Chamberlain once observed, "Nobody roots for Goliath." Yes, sometimes it is hard to root for a giant like Wal-Mart, the biggest retailer on the planet, with $285 billion in annual revenue. One thing about having big revenue, however, is that operating costs are equally big. For example, Wal-Mart recently said that its operating costs in the second quarter rose 0.3 percent. That doesn’t sound like much until you realize that for Wal-Mart, a 0.3 percent increase translates into $230 million in additional operating costs. Hiring healthier workers is just one suggestion being offered by Susan Chambers, Wal-Mart’s executive vice president for risk management and benefits administration, in her well- publicized memo to the company’s board of directors on how to hold down the growing cost of employee benefits. If you haven’t read the entire memo, you should. The document (in two slightly different versions) is available online at http://WalMartWatch.com and on The New York Times’ Web site, as well as on Wal-Mart’s own site. It is a fascinating look into how even a company as large and successful as Wal-Mart struggles to control benefit costs. This is starting to sound like a broken record. Companies everywhere, from Delphi to Delta Airlines, are filing for bankruptcy, discarding pensions and paring benefits in a desperate attempt to try to keep costs down and remain more competitive. Some might pooh-pooh this notion as it applies to Wal-Mart, but if you manage a workforce and are concerned about the cost of benefits, it is sobering to read Chambers’ memo. At one point she says: "From 2002 to 2005, (Wal-Mart’s) benefit costs grew significantly faster than sales, rising from 1.5 percent of sales to 1.9 percent. Benefits spending grew from $2.8 billion to $4.2 billion during this period, at a rate of 15 percent per year. … A few benefits made up the bulk of this increase: health care ($1.5 billion) grew by 19 percent, paid time off ($1.4 billion) grew by 14 percent, and profit-sharing and the 401(k) program ($740 million) grew by 13 percent." And she adds: "Growth in benefits costs is unacceptable (15 percent per year). … Unabated, benefit costs could consume an incremental 12 percent of our profits in 2011,"equal to $39 billion to $35 billion in market capitalization. Wal-Mart’s efforts capture the struggle that all of Corporate America is having in trying to control fast-growing health and benefit costs. And the most frightening statistic in Chambers’ memo is this: Only 48 percent of all Wal-Mart employees are covered by the company health plan. That compares with 68 percent of employees who are covered by a health plan at similar national employers. If Wal-Mart even approached that percentage of health care coverage for its workforce, the huge costs highlighted in the Wal-Mart memo would be astronomical. "These are indications of the gaps in the health care system that are exposed by Wal-Mart," Len Nichols, a health economist at the New America Foundation, told The New York Times. "You can’t blame Wal-Mart." Nichols may be right. Wal-Mart is simply an indicator of a larger problem. Our health care system is at a crossroads, and it is hard to see how Corporate America can continue to foot so much of the bill. Workforce Management, November 7, 2005, p. 58 -- Subscribe Now! ............ Well it seems that people who are employed will be seeing their paychecks shrink.. for many reasons one being that employers will no longer 'foot the bill' for healthcare costs.. And that will include retirement plans..
Top • Page Up • Full Thread • Page Down • Bottom/LatestWithout 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.
#5. To: Fred Mertz (#2)
Benjamin Franklin
Thomas Jefferson - letter to William Plumer, July 21, 1816.
George Washington, Message to the House of Representatives, December 3, 1793.
Thomas Jefferson to Albert Gallatin, 1809. FE 9:264.
Thomas Jefferson to Nathaniel Macon, 1821. (*) FE 10:193.
Thomas Jefferson to Samuel Kercheval, 1816. ME 15:39.
Thomas Jefferson to William H. Crawford, 1816. ME 15:29.
Thomas Jefferson to C. W. F. Dumas, 1790. ME 8:47.
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