Some highlights of interest:
Let’s say you and I and Bruce Ericson and every U.S. citizen who is alive today decided to fully address this unfunded liability through
lump-sum payments from our own pocketbooks, so that all of us and all future generations could be secure in the knowledge that we and they would
receive promised benefits in perpetuity. How much would we have to pay if we split the tab? Again, the math is painful. With a total population of 304
million, from infants to the elderly, the per-person payment to the federal treasury would come to $330,000. This comes to $1.3 million per family of
four—over 25 times the average household’s income.
Suppose we decided to tackle the issue solely on the spending side. It turns out that total discretionary spending in the federal budget, if
maintained at its current share of GDP in perpetuity, is 3 percent larger than the entitlement shortfall. So all we would have to do to fully fund our
nation’s entitlement programs would be to cut discretionary spending by 97 percent. But hold on. That discretionary spending includes defense and
national security, education, the environment and many other areas, not just those controversial earmarks that make the evening news. All of them
would have to be cut—almost eliminated, really—to tackle this problem through discretionary spending.
Here is the MSM approach to reporting this event:
MarketWatch
It is quite amazing how that article glazes over all the pertinent information and goes straight to talk of the Federal Funds Rate. The entitlement
math should be at the forefront of an investors mind, as it will shake up the bond markets and treasuries (at least) for some time to come.
As a closing, I leave you with his words:
Of late, we have heard many complaints about the weakness of the dollar against the euro and other currencies. It was recently argued in the op-ed
pages of the Financial Times [3] that one reason for the demise of the British pound was the need to liquidate England’s international reserves to
pay off the costs of the Great Wars. In the end, the pound, it was essentially argued, was sunk by the kaiser’s army and Hitler’s bombs. Right
now, we—you and I—are launching fiscal bombs against ourselves. You have it in your power as the electors of our fiscal authorities to prevent
this destruction. Please do so.
[edit on 5/29/08 by aava]
