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09/21/2004 Archived Entry: "Gordon on the economy"
Gordon P. provides a much-needed warning about the economic future.
He writes, The "budget shortfall" appears to be =FAR= worse than even _I_ thought: Taking into account _only_ the estimated Social Security and Medicare liabilities that will be incurred when the "Baby Boomers" retire, the "fiscal gap" (all future gov't receipts minus all future obligations, deflated to "2004 dollars") is estimated to be somewhere between US$ 40 trillion (GAO) and US$ 72 trillion (Social Security Board of Trustees). Other estimates: US$ 47 trillion (IMF), US$ 60 trillion (Brookings Institute).
To quote from an article in the San Francisco Chronicle: "A pathbreaking study by Jagadeesh Gokhale of the Federal Reserve Bank of Cleveland and Kent Smetters, a former deputy assistant secretary at the Treasury -- commissioned by former Treasury Secretary Paul O'Neill -- estimated a $44 trillion fiscal gap. It laid out a few painful options on how to meet the liabilities:
-- More than double the payroll tax, immediately and forever, from 15.3 % of wages to nearly 32 %;
-- Raise income taxes by two-thirds, immediately and forever;
-- Cut Social Security and Medicare benefits by 45 %, immediately and forever;
-- Or eliminate forever all discretionary spending, which includes the military, homeland security, highways, courts, national parks and most of what the federal government does outside of transfer-payments to the elderly.
These numbers are _SO_ bad that I have to wonder if we may potentially be looking at the FedGov seizing, er, "nationalizing" all corporate pension funds and all private 401-K's "For The Good Of The Nation"... :-(
At the risk of being repetitive: get out of debt, get out of American $ or at least diversify, stock your pantry with a year's worth of food, don't trust banks, don't expect to receive promised benefits from government (e.g. social security), become as self-sufficient as possible.