The Cost of Indecision
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Steve Verdon | Tuesday, November 14, 2006 |
Laurence Kotlikoff spells out what the costs are of ignoring the problems of Social Security and Medicare.
Let’s face it–Uncle Sam is broke. The gap between the U.S. government’s future expenses and tax receipts is $63.3 trillion. No surprise. The nation has 77 million retiring baby boomers on track to collect well above $30,000 a year–the average amount we’re paying today’s elderly–in Social Security, Medicare and Medicaid benefits. If you’re planning for a cushy retirement, forget it. Get ready for much higher taxes, lower benefits and inflation.
Fun, eh? People (e.g. Nancy Pelosi) complain that the Republicans were too stingy with the Prescription Drug Program and that the “donut hole” has to be closed. But the truth is that the Republicans were too generous and the Democrats most likely will be even far more generous. On top of this, there is nobody in Washington that can take care of this problem right now, and like credit card debt where even the interest isn’t paid off, this inaction means that the problem just becomes more and more expensive.
About the Author: Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research.
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I agree completely that Social Security and Medicare need to be addressed. I also think that Democrats are better-positioned to address them than the Republican from a political standpoint (although we may not much care for the solutions they propose).
The two problems are quite different, however. Social Security can be corrected as it has been in the past: by tweaking it. A little tax increase, a little adjusting Social Security retirement age, etc.
Medicare is different. The whole health care system has been corrupted by it and now needs a major overhaul.
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