MORTGAGING THE FUTURE
October 5, 2004
The long-term economic health of the United States is threatened by government debts and liabilities that start to come due in four years when baby boomers begin to retire, says USA Today.
The "Greatest Generation" and its baby-boom children have promised themselves benefits unprecedented in size and scope. Many leading economists say that even the world's most prosperous economy cannot fulfill these promises without a crushing increase in taxes -- and perhaps not even then.
According to a USA Today analysis:
- America's "hidden debt" -- that is, money needed today to repay debts and promised future benefits or Medicaid, Medicare and Social Security -- is about $53 trillion, which amounts to about $473,456 per household (obviously trumping the average household personal debt of $84,454).
- By just using tax hikes to solve the crisis, taxes would need to increase dramatically, from about $20,000 to $40,000 per year for a family with an income of $100,000; state taxes would increase by 20 percent.
- By reducing entitlements as a possible solution, they would all need to be cut in half, from an average of $1,500 per month in Social Security to $750 per month for couples; military pensions would drop from $1,782 per month to $891.
- Medicare benefits would be cut in half from $7,500 to $3,500 annually, while the new prescription drug benefit would be dropped.
If a combination of tax hikes and benefit cuts are the solution, taxes would still need to increase by 50 percent while benefits would be cut by 25 percent.
Source: Dennis Gauchon and John Waggoner, "One Nation, Under Debt," October 4, 2004.
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