A FUNDAMENTAL SHIFT IN THINKING
August 9, 2007
Robert J. Samuelson is correct in saying the presidential candidates are ignoring the elderly entitlement crisis. But he is wrong in his suggestion that no think tank is working on this or dealing with these issues in a comprehensive way, says John C. Goodman, president at the National Center for Policy Analysis (NCPA).
In fact, NCPA senior fellow Laurence Kotlikoff has written extensively about the coming generational storm. And no one has done more to collect the numbers and alert the public than NCPA senior fellow and Social Security and Medicare Trustee Thomas Saving. For example, according to Saving:
- Medicare and Social Security combined are on track to eat up the entire federal budget.
- The trustees estimate the 75-year burden on general revenues from these two programs at $31.9 trillion, more than six times the current outstanding federal debt.
- Looking beyond 75 years into the indefinite future, the combined long-run funding gap is $74.8 trillion in today's dollars.
Further, Congress will not have to wait long to feel the pinch, says Goodman:
- Last year the combined deficits in the two programs claimed 5.3 percent of federal income tax revenues; in 15 years these two programs will require more than a fourth of income tax revenues.
- By 2030, about the midpoint of the baby boomer retirement years, these two programs will require almost half of all federal income tax dollars; by 2040 it will require two-thirds.
What can be done? We are going to have to start thinking about choosing between health care and other uses of money, says Goodman. We are also going to have to start thinking about having each generation of retirees save for its own retirement and its own retirement health care needs. If we wait too long, the solutions will be drastic and painful.
Source: John C. Goodman, "A Fundamental Shift in Thinking," Washington Post, August 8, 2007.
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