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Willisms

« Trivia Tidbit of the Day: Part 590 -- The Stimulus Package Not Measuring Up To Promises. | WILLisms.com | Trivia Tidbit of the Day: Part 592 -- Illegitimacy Rates. »

Trivia Tidbit of the Day: Part 591 -- Entitlement Bubble.

And You Thought Bailouts Were Bad-

The various bailouts we've seen in recent months are pretty outrageous and unacceptable. Lots and lots of money, much of which is being flushed right down the drain. Lots of money going into corrupt hands. Lots of money being taken out of the private sector. Lots of money being printed and lots of debt being passed on to future generations.

Well, if you thought bailouts were bad, take a look at some perspective on the entitlement bubble headed our way:

entitlementbubbles.gif

The unfunded liability in Social Security and Medicare are 61 times greater than the TARP bailout. Over the longer term, without a serious and thoughtful fix, Medicare is going to be the disaster that ruins American free enterprise. In the shorter term, though, Social Security is the biggest issue and even more pressing than Medicare. Indeed, Chuck Blahous notes:

In a nutshell, the story is this: Social Security's finances are significantly weaker than foreseen even just a year ago. Last year, the Trustees projected that the program would enter permanent cash deficits in 2017. This year, that date has been moved forward slightly, to 2016. Not since the 1983 reforms has the program been so close to operating deficits. The projected Social Security insolvency date (of legal significance but less meaningful as a measure of the program's economic impact) has advanced by four years, from 2041 to 2037.

....

Remember all of those advocacy pieces saying that there was no entitlements problem, no Social Security problem, but only a health care problem? Guess what: Social Security costs are rising this year by more ($57 billion) than all of the components of Medicare combined ($43 billion.) Medicare certainly has the greater long-term shortfall, but in the near-term, Social Security's cost growth is just as great an issue as Medicare's.

The total effect of the worsened Social Security outlook is to severely constrain the choices facing policymakers as well as the time during which they need to be made. If we act soon, we can fix program finances, without cutting benefits for those in retirement, without imposing real declines in future benefit levels, and even without raising taxes. But the window for avoiding these tough choices will close in just a few more years.

It's a bubble. And it will burst in the not-so-long term without legitimate and substantial reform in the very-short term.

So many times in recent decades, when a bubble bursts, people say, "nobody saw it coming."

Well, we see this coming. It's pretty clear what's happening. We know how to fix it. It's only dogma and demagoguery, pure and simple, that is keeping us from doing what we need to do to save our fiscal ship from hitting the giant, obvious, slow-moving iceberg we're about to crash into-- and then act dumb and say, "nobody saw it coming."

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Previous Trivia Tidbit: Stimulus Not Stimulating As Promised.

Posted by Will Franklin · 14 May 2009 05:34 PM

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