David Walker In Fortune Magazine
It appears I.O.U.S.A. (
Aug 7: I.O.U.S.A. Movie Trailer) was not quite the hit that
Quantum of Solace was - shocking, indeed. Warren Buffet just does not fill seats the way Al Gore does...
As we look into the deep future (
Nov 12: CNBC Europe: USA May Lose its AAA Rating) errr... as we look to address emergencies around us in the immediate now while kicking the can down the pebble road on our long term issues - there is one man who has been sounding the alarm bell for a decade now. However, since he has not appeared in Ocean's Eleven he is not getting much play except for people in my type of circles. But
Mr Walker wrote a nice piece in last week's Fortune Magazine so we'll keep touting this until the day the healthcare entitlements of the country swallow up say 1 out of every 2 dollars of GDP - then as usual we'll begin to "address it" - reactive, not proactive - that's us! Sure it will cost 20x what it would to address it now, but we only deal in the here and now. Keep in mind, while this has none of the attention I think it will actually be a more destructive force than what we are going through now if left unchecked - which is saying a lot considering the damage we're taking today.
- Staring into the abyss always focuses the mind, which can help you avoid falling in. So let's take a look at the potential catastrophe that awaits us once we survive our current crisis.
- At the dawn of the 21st century the U.S. had $5.7 trillion in total debt. As we approach the end of George W. Bush's presidency only eight years later, that sum has nearly doubled, thanks to war costs, tax cuts, spending increases, expanded entitlement programs, and now a welter of government bailouts and rescues.
- Yet any such calculations are penny ante compared with the fiscal disaster that is bearing down on America. It's no longer an event in the misty future. The entitlements due from Social Security and Medicare present us with that frightening abyss. The costs of these current programs, along with other health-care costs, could bankrupt our country. The abyss offers no assets, troubled or otherwise, to help us cross it.
- Yes, some have suggested less-than-revolutionary measures that could help. Among them: budget savings that would accrue from repealing the Bush-era tax cuts, ending the Iraq war, or expanding the economy after the current downturn runs its course. But even if the economy were to grow at the level of 3.2% a year, as it did in the 1990s, and these other savings were achieved, they wouldn't come close to addressing our federal financial problem.
- The costs of these programs start to threaten our solvency in the next several years. The only way to get across the chasm is to begin making tough choices now to change our current course. Delay will make the problem worse.
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