THE COMING FINANCIAL STORM
May 27, 2009
All things considered, the accelerating overspending that characterized the last days of President Bush and which gave way to the spending-on-steroids appetite of these early days of Obama, are child's play when compared to the much bigger financial storm descending on America, says Matt Kinnaman, a former Republican candidate for Congress.
As of 2008:
- Social Security's unfunded liabilities stood at $13.6 trillion.
- Medicare's unfunded liabilities are more than $30 trillion.
- Medicaid, another severely underfunded and politically untouchable entitlement program, only adds to the total.
- The federal government's current entitlement bill, including future obligations-based only on promises it has made in the past -- is greater than $57 trillion.
When the first Baby Boomers started drawing early retirement benefits from Social Security last year, they represented only the ripple before the tsunami. John C. Goodman, president and CEO of the National Center for Policy Analysis (NCPA), pointed this out three months ago at the Hillsdale College National Leadership Seminar.
"All told," says Goodman, "78 million people are going to stop working, stop paying taxes, stop paying into retirement programs and start drawing benefits. The problem is neither Social Security nor Medicare is ready for them. The federal government has made explicit and implicit promises to millions of people, but has put no money aside in order to keep those promises."
According to a recent forecast by the Congressional Budget Office -- an economic forecasting agency that is controlled by the Democrats in Congress -- shows that Medicare and Medicaid alone are going to crowd out everything else the federal government is doing by mid-century. And that means everything-national defense, energy, education, the whole works. We'll only have health care, says Kinnaman.
By mid-century, a middle income American family will need to pay two-thirds of its income to the federal government to fund the level of services we've become accustomed to today, says the NCPA.
Source: Matt Kinnaman, "180 degrees wrong," Bennington Banner, May 27, 2009.
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