Iraqi War, Alito, Plamegate, or Should It Be … About the Economy?
By Denise Best | Related entries in Economy, In The NewsIraq, Alito, abortion rights, Plame Game, and don’t forget the bird flu.
So many issues, so little time, and coming at us from so many directions, almost like the swirls of a storm.
Are we just in the eye of the fiscal hurricane?
“We face a demographic tsunami” that “will never recede,” David Walker tells a group of reporters. He runs through a long list of fiscal challenges, led by the imminent retirement of the baby boomers, whose promised Medicare and Social Security benefits will swamp the federal budget in coming decades.
The breakfast conversation remains somber for most of an hour. Then one reporter smiles and asks, “Aren’t you depressed in the morning?”
Sadly, it’s no laughing matter. To hear Walker, the nation’s top auditor, tell it, the United States can be likened to Rome before the fall of the empire. Its financial condition is “worse than advertised,” he says. It has a “broken business model.” It faces deficits in its budget, its balance of payments, its savings â€â€? and its leadership.
So, is this just another “Chicken Little - the sky is falling,” type of warning?
Is it just partisianship at play?
From the political left and right, budget watchdogs are warning of fiscal trouble:
• Douglas Holtz-Eakin, director of the non-partisan Congressional Budget Office, dispassionately arms 535 members of Congress with his agency’s stark projections. Barring action, he admits to being “terrified” about the budget deficit in coming decades. That’s when an aging population, health care inflation and advanced medical technology will create a perfect storm of spiraling costs.
• Maya MacGuineas, president of the bipartisan Committee for a Responsible Federal Budget, sees a future of unfunded promises, trade imbalances, too few workers and too many retirees. She envisions a stock market dive, lost assets and a lower standard of living.
• Kent Conrad, a Democratic senator from North Dakota, points to the nation’s $7.9 trillion debt, rising by about $600 billion a year. That, he notes, is before the baby boom retires. “We’re not preparing for what we all know is to come,” he says. “We’re all sleepwalking through this period.”
• Stuart Butler of the conservative Heritage Foundation projects a period from now until 2050 in which tax revenue stays stable as a share of the economy but Medicare, Medicaid and Social Security spending soars. To avoid big tax increases, he says the government has to “renegotiate” the social contracts it made with its citizens.
• Alice Rivlin and Isabel Sawhill of the centrist Brookings Institution put their pessimism into a book titled Restoring Fiscal Sanity. Rivlin, who became the first director of the Congressional Budget Office in 1974, says it will take an “economic scare” such as the 1987 stock market crash to spur action. Sawhill likens the growing gulf between what the government spends and takes in to a “Category 6 fiscal hurricane.”
Read the whole article and ask yourself …
“Is this a storm forecast we can afford to continue to ignore?”
This entry was posted on Tuesday, November 15th, 2005 and is filed under Economy, In The News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
November 15th, 2005 at 12:25 pm
I think the government is afraid to do anything, because they know they’re going to piss off part of their constituency, no matter what action they take.
The voters can probably be divided into 4 equal parts:
1) Reduce ALL spending and no tax increases
2) Reduce spending (but only on the programs I don’t like) and don’t raise taxes.
3) Reduce spending and increase taxes
4) Keep on spending and increase taxes
Not saying which is the best, but no matter what, somebody is going to have their feelings hurt. The government figures they’ll just keep going the way they are going, and hope nobody notices.
November 15th, 2005 at 4:56 pm
We are so far in hock right now that we will HAVE to raise taxes, pretty much no matter what. Especially if the economy starts to slow again (likely considering the oil crunch).
Reducing spending is a lovely idea, but only seems to work under rare circumstances - usually when government is balanced between the parties so neither gives the other what they want, so everyone goes home porkless. Or at least pork-light.
Frankly if we had kept up with how we were going with Clinton we would still have problems, Bush & the Republican congress have moved us from the “problem” level to catastrophic failure in just 5 short (though they’ve seemed interminable) years.
I expect I’ll probably be moving out of the country by 2015, sooner if we get another Republican president.
November 15th, 2005 at 5:18 pm
So, sleipner …
What country are you eyeing to be a good new home?
November 15th, 2005 at 5:59 pm
Ha…considering Australia, possibly southern Spain, or perhaps one of the more modern cities in South America. I’m sure you’ll be devastated to see me go
I hope it won’t come to that extreme though, but if things keep going the way they are now America will no longer be the home of the free…we’ll be the home of the owned. Picture an American flag yoyo on the finger of China…
December 8th, 2005 at 2:02 am
Sleipner, Australia is good US Dollars worth 25-30% more & no major terrorism to spesk of. New Zealand but average annual temp. of
50-60 degrees in most areas. The true economic reprecussions are about to catch up & will be revealed 2006-2007′ & the actual 2007-2009′ implosion comes way before 2015′.
April 1st, 2006 at 8:14 pm
Hi :D