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The Coming Entitlement Meltdown[Ron Paul]
http://www.house.gov/paul/ ^ | 05 March 2007 | Ron Paul

Posted on 03/08/2007 7:28:59 PM PST by FLOutdoorsman

David Walker, Comptroller General at the Government Accountability Office, appeared on the show “60 Minutes” last evening to discuss the federal budget outlook. If you saw the show, you know that he painted a very sobering picture regarding the federal government’s ability to meet its future obligations.

If you didn’t see the show, Mr. Walker’s theme was simple: government entitlement spending is like a runaway freight train headed straight at American taxpayers. He singled out the Medicare prescription drug bill, passed by Congress at the end of 2003, as “probably the most fiscally irresponsible piece of legislation since the 1960s.”

When it comes to Social Security and Medicare, the federal government simply won’t be able to keep its promises in the future. That is the reality every American should get used to, despite the grand promises of Washington reformers. Our entitlement system can’t be reformed- it’s too late. And the Medicare prescription drug bill is the final nail in the coffin.

The financial impact of the drug bill cannot be overstated. Government projections that the program would cost $400 billion over the next decade were a joke, as everyone in Congress knew even as they voted for the bill. The real cost will be at least $1 trillion in the first decade alone, and much more in following decades as the American population grows older.

The Medicare “trust fund” is already badly in the red, and the only solution will be a dramatic increase in payroll taxes for younger workers. The National Taxpayers Union reports that Medicare will consume nearly 40% of the nation’s GDP after several decades because of the new drug benefit. That’s not 40% of federal revenues, or 40% of federal spending, but rather 40 % of the nation’s entire private sector output!

The politicians who get reelected by passing such incredibly shortsighted legislation will never have to answer to future generations saddled with huge federal deficits. Those generations are the real victims, as they cannot object to the debts being incurred today in their names.

The official national debt figure, now approaching $9 trillion, reflects only what the federal government owes in current debts on money already borrowed. It does not reflect what the federal government has promised to pay millions of Americans in entitlement benefits down the road. Those future obligations put our real debt figure at roughly fifty trillion dollars- a staggering sum that is about as large as the total household net worth of the entire United States. Your share of this fifty trillion amounts to about $175,000.

Don’t believe for a second that we can grow our way out of the problem through a prosperous economy that yields higher future tax revenues. If present trends continue, by 2040 the entire federal budget will be consumed by Social Security and Medicare alone. The only options for balancing the budget would be cutting total federal spending by about 60%, or doubling federal taxes. To close the long-term entitlement gap, the U.S. economy would have to grow by double digits every year for the next 75 years.

The answer to these critical financial realities is simple, but not easy: We must rethink the very role of government in our society. Anything less, any tinkering or “reform,” won’t cut it. A good start would be for Congress to repeal the Medicare prescription drug bill.


TOPICS: Business/Economy; Government
KEYWORDS: entitlement; gao; genx; medicare; socialsecurity
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To: operation clinton cleanup
As far as prescription drugs go, wouldn't it be cheaper for the Government to buy out the patents once a worthwhile drug is developed and give them away? It's the R&D that costs all the money, not the manufacturing of the product.

Yes, it might be economically more sensible, and is probably worth exploring.

Had I my druthers, I would rather see the stupid drug "benefit" ended. Since the Republicans (who let this nonsense go through while in control of Congress) do not even control Congress at this point, there's no way now that we can end this fiscal nightmare before it becomes far too entrenched to be removed. At least we look at some ways to try and make it less burdensome. Outright buying of relevant patents and releasing them into the public domain might generate some overall savings.

51 posted on 03/09/2007 6:43:01 AM PST by snowsislander
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To: mc6809e

If that happens, anything you own will also be worthless - might as well start living like cavemen.


52 posted on 03/09/2007 6:43:15 AM PST by RockinRight (My wish for Islam - The Glass Parking Lot Formerly Known As The Middle East.)
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To: saganite

I don't agree. I've found Gen X and Gen Y to be MORE conservative than their parents. Immigrants aside, that is...


53 posted on 03/09/2007 6:43:58 AM PST by RockinRight (My wish for Islam - The Glass Parking Lot Formerly Known As The Middle East.)
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To: FLOutdoorsman

I've railed against the Ponzi scheme we call Social Security for over 30 years and I've paid FICA taxes continuously since 1960. I even hit the cap when I was a captain on flight pay in the 70s. Now, just this month, I got my first Social Security check. I feel like I've gone over to the dark side, but what I need now is for everyone to keep paying and paying and paying those FICA taxes. Thank you very much.


54 posted on 03/09/2007 6:49:08 AM PST by leadpenny
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To: MarkL
Unfortunately, I can also see them both inflating the money supply AND devaluing the dollar...

You got that right...they admit as much. I remember when former US Senator and current NJ Governor Jon Corzine was running for his current seat...criticizing the far too modest plan of giving people the option of putting a small portion of their payroll taxes in personal retirement accounts...former Goldman Sachs CEO (and unrepentent socialist) Corzine said "the US government will always be able to meet its obligations because it can print money"

real financial wizard that Corzine is

President George W. Bush traveled April 5 to Parkersburg, West Virginia to visit the so-called Social Security Trust Fund: a filing cabinet filled with paper. "There is no trust fund — just IOUs," backed by no economic assets whatsoever, Bush noted.

Senator Jon Corzine (D., N.J.) called the president's remarks misleading. In a conference call with journalists, Corzine said: "U.S. Treasury securities have the ability to be paid under any circumstances based on the ability of the government to print money." While Corzine's press secretary denies this comment was a concrete proposal, at this writing, the senator proudly highlights this quote on the front page of his website.

Stop the Presses: Jon Corzine would inflate the currency instead of reforming Social Security

55 posted on 03/09/2007 6:55:14 AM PST by Irontank (Let them revere nothing but religion, morality and liberty -- John Adams)
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To: RockinRight

Should have made myself clear. I was discussing the boomer generation.


56 posted on 03/09/2007 7:01:10 AM PST by saganite
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To: FLOutdoorsman
Some guy whom I disagreed with on a number of issues had one brilliant point yesterday, and was absolutely correct. A government's very currency is linked to its perceived trustworthiness. It is obvious that our government has made many rash, stupid and irresponsible promises, and has wasted most of the assets needed to meet those promises.

There is no way for them to meet those obligations. My guess is that they will begin radically means-testing Social Security benefits in the upcoming years, which means I won't get any, and neither will most people who have accumulated any real assets. I do not count on receiving a dime from SS. The interesting thing about this is how it affects my sense of loyalty to the USA. We are spending in a manner that makes no sense, running up fabulous credit shams in the name of "expanding," and engaging in empire building/maintenance in the name of "waging a war on terror." I am ready to take my assets, leave, and shoot Uncle Sam the finger on the way out. It really is only a matter of wanting to be able to return to visit family that keeps me from just renouncing my citizenship and leaving now. I never would have thought it would come to this.

57 posted on 03/09/2007 7:08:00 AM PST by DreamsofPolycarp (Ron Paul in '08)
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To: mo

I beleive the same thing. Us Americans will be diluted into 3rd-world citizens.


58 posted on 03/09/2007 7:22:34 AM PST by ▀udda▀udd (7 days - 7 ways Guero >>> with a floating, shifting, ever changing persona....)
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To: FLOutdoorsman
The prescription drug bill, Bush's 2nd biggest mistake after doing nothing re the borders, which is #1 in my book.
59 posted on 03/09/2007 7:24:41 AM PST by RetiredArmy (America has lost it's Effin' mind and will never recover.)
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To: TheKidster
the baby boomers are histories most irresponsible generation. Trust me, we feel the same way about "The Greatest Generation" that brought us Social Security, Medicare, and exponential growth in government. "The Greatest Generation" felt the same way about the generation before them that invented socialism and the income tax. The generation before them represented corruption in government and robber barons. Before them was the Civil War and the end of federalism. And so on.

Your generation will be no better. Your only hope is to learn from our mistakes--don't elect politicians who want to use their position to strengthen their own power and prestige, but elect those who want to minimize the role of government. Be wary of the politician who wants to make government "more efficient"--that's a buzzword for bigger and more powerful. Elect people who want to make government fail, because that's the only way that the masses will realize that "government is not the solution--it's the problem."

60 posted on 03/09/2007 7:33:01 AM PST by NoneOfTheAbove (Economics=Reality; Politics=Fantasy; When politics meets reality, economics decides the winner)
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To: mc6809e
"I really don't care if the government's credit is ruined. It deserves to be ruined."

Start buying gold now if you think that will happen.

61 posted on 03/09/2007 7:37:02 AM PST by blam
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To: NoneOfTheAbove

Sage advice, I wish more people had the English Lit teacher I had in HS who pretty much said the same thing and spent most of the year having us study, in exquisite detail, Atlas Shrugged.
He was a rare gem.


62 posted on 03/09/2007 7:57:15 AM PST by TheKidster (you can only trust government to grow, consolidate power and infringe upon your liberties.)
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To: NoneOfTheAbove

Yep. The "Greatest Generation", whose ravenous pig-squealing appetite for entitlements has led us to this mess. But somehow it's the Baby Boomers' fault? Gimme a break.


63 posted on 03/09/2007 8:01:54 AM PST by Wolfie
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To: TheKidster
I don't think the Boomers have cornered the market on narcissism. From a recent USA Today poll on Generation Y:

* 81 percent said getting rich is was their most important or second most important life goal;

* 51 percent said the same about being famous;

Ref: http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=54193

You might say that it's the Boomers' influence that caused this. If so, might the Boomers blame their failures on those of the Greatest and Silent Generations for raising them improperly?

It's nice to have someone to blame, but history shows that prosperous societies eventually become soft, decadent, and complacent, and that's their downfall. It's human nature, and that's where we're heading.

64 posted on 03/09/2007 8:23:54 AM PST by FlyVet
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To: FlyVet

You may be right but it is really hard to swallow the fact that I'm funding thier retirement with the money that was supposed to fund mine. Not only that but I have no choice in the matter. The gvt. steals the money from my paycheck each and every week I work.


65 posted on 03/09/2007 8:47:36 AM PST by TheKidster (you can only trust government to grow, consolidate power and infringe upon your liberties.)
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To: DreamsofPolycarp
I am ready to take my assets, leave, and shoot Uncle Sam the finger on the way out. I keep thinking the same thing, but I'm at a loss to find someplace where I would be more free, the government didn't look at me as a cash cow, and the role of government isn't to make more government.
66 posted on 03/09/2007 8:53:14 AM PST by NoneOfTheAbove (Economics=Reality; Politics=Fantasy; When politics meets reality, economics decides the winner)
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To: NoneOfTheAbove
Looking right now at Belize, Ecuador, Chile, and Argentina.

Different levels of corruption, but at least when you pay em off, they stay paid.

67 posted on 03/09/2007 9:04:49 AM PST by DreamsofPolycarp (Ron Paul in '08)
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To: FLOutdoorsman
Liberals would welcome it and would block any attempt to address entitlements head on. Conservatives will shrink away from dealing with it for fear of losing votes.

"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus

68 posted on 03/09/2007 9:08:11 AM PST by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
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To: TheKidster
If it makes you feel any better, I think many of us younger Boomers (I've recently been reclassified as "Generation Jones", does that get me off the hook?) are going to get shafted on Social Security.

I won't reach retirement age for about 20 more years and I think by then it will be means tested at best. Retirement age will also be raised. Since I already have a military pension and IRA accounts, I've written off Social Security a long time ago. And I'll bet you a lot of others my age think the same way as I do.

69 posted on 03/09/2007 9:11:30 AM PST by FlyVet
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To: FlyVet

I appreciate that, but it doesn't make me feel any better, it adds to the frustration. Oh how often do I wish for the ability to opt out of SS. That would be AWESOME!


70 posted on 03/09/2007 9:16:15 AM PST by TheKidster (you can only trust government to grow, consolidate power and infringe upon your liberties.)
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To: MarkL

A wise man would have his retirement money solely in cash. No way the IRA's will be free from the tax man in 20 years.


71 posted on 03/09/2007 9:29:53 AM PST by Bluestateredman (Self-sufficiency is the American Way)
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To: TheKidster
Well W tried to privatize just 10% of it, and Congress squealed like pigs. People refuse to face the reality that the Ponzi scheme is going to crash and burn. Believe me, I'd like to opt out too, along with many others.

If we survive the crash we will return to the philosophy that you must be strong and self-sufficient to survive, the foundation that built the Greatest Generation, and that's a good thing. But it ain't gonna be fun. Steel yourself.

72 posted on 03/09/2007 9:29:59 AM PST by FlyVet
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To: OrthodoxPresbyterian

bookmark


73 posted on 03/09/2007 9:36:58 AM PST by traviskicks (http://www.neoperspectives.com/Ron_Paul_2008.htm)
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To: Bluestateredman
I agree with the IRA taxation. I wouldn't be surprised if Roth IRAs end up getting taxed. However it's easy to destroy cash with inflation. That Wiemar Republic and Confederate States cash made for some very pretty wallpaper, though. Precious metals? It's easy for a government to make ownership illegal. FDR did it.
74 posted on 03/09/2007 9:44:49 AM PST by FlyVet
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To: FLOutdoorsman

Damn Ron Paul and David Walker for speaking the truth! That is NOT allowed in Washington D.C. these days!


75 posted on 03/09/2007 9:57:02 AM PST by Bigun (IRS sucks @getridof it.com)
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To: Hostage
when you find a place, let us all know.....

actually, many of us might find ourselves living in conservative communes....living off the land and sharing our resources and responsibilities.....I wouldn't mind it if I could live with people of similar morals and values.

76 posted on 03/09/2007 10:24:28 AM PST by cherry
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To: MarkL
"Just because the government will default on SS and Medicare doesn't mean that they're going to stop taxing you for it."

this is similar to what's happening to my Catholic diocese here in Spokane Wa area.. re: priest sexual abuse of youngsters.....

we had NO say in what went on, we are told that the parishes belong to the parishioners...hah...yet we are now told that the parishes will have to fork over a year's worth of collections each to pay for this debacle.....

fat chance that this household will.....

just like the govt...we have no say in the taxes...we have no say no what they do with our money...yet they come back to us for more of it when they screw up.....

77 posted on 03/09/2007 10:31:30 AM PST by cherry
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To: MichiganConservative
some of the worse....very worse and most dangerous....liberals are male....

and some of the best conservatives are female....

besides the fact that many women make more money than their spouses and many women own their own homes......

but in general I would agree that home or property ownership would make someone's vote a little more realistis and practical....

78 posted on 03/09/2007 10:34:09 AM PST by cherry
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To: FlyVet
for the record, I think after one receives every penny they paid into SS, the rest should be means tested, which will mean that many better off retirees will get no more....

I feel this way because we can all complain about SS and Medicare but the real deal buster will be these lavish govt benefits at all levels ....education, police, military, city, county, state, federal.....

there will be two types of retired..those with the guarenteed govt pensions and medical retirement benefits and those without either....

why should the same taxpayers who footed the bill for govt pensions also be the same ones suffering when there is no money for SS?

there will be means testing and it will affect anyone getting the defined pension plans bought and paid for by US taxpayers ....it has to be....

79 posted on 03/09/2007 10:43:36 AM PST by cherry
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To: cherry
for the record, I think after one receives every penny they paid into SS, the rest should be means tested, which will mean that many better off retirees will get no more.

And so you get a return of 0% on that money? In fact, after inflation, it's a loss for you if you think about buying power.

How about we call it what it is - a massive fraud perpetrated on the American people by a criminal government - and abolish it?

80 posted on 03/09/2007 10:48:03 AM PST by MichiganConservative (If you don't like rape, then don't rape anyone. Don't push your morality on others.)
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To: blam; mc6809e
"I really don't care if the government's credit is ruined. It deserves to be ruined."

Start buying gold now if you think that will happen.

The government's credit can never be ruined as long as there are hard working americans to tax and plunder and it has printing presses. They run low on cash and they just either print more or loot more.

81 posted on 03/09/2007 12:52:46 PM PST by from occupied ga (Your most dangerous enemy is your own government)
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To: The_Eaglet
The Medicare Prescription Drug Plan will put another nail in the coffin of retirement benefits as well. Companies who gave this benefit as part of the employee retirement package will be encouraged to dump the cost on the government. Most states Medicaid programs have also turned over the prescription cost for the disabled once covered by Medicaid to Medicare.
82 posted on 03/09/2007 1:51:28 PM PST by cva66snipe (Kool Aid! The popular American favorite drink now Made In Mexico. Pro-Open Borders? Drink Up!)
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To: RockinRight
If that happens, anything you own will also be worthless - might as well start living like cavemen.

You're confusing money and value.

83 posted on 03/09/2007 2:31:09 PM PST by mc6809e
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To: mc6809e

I mean stocks, cash, those kind of assets...and probably real estate too...and your job? Bye bye.


84 posted on 03/09/2007 2:32:19 PM PST by RockinRight (My wish for Islam - The Glass Parking Lot Formerly Known As The Middle East.)
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To: RockinRight
I mean stocks, cash, those kind of assets...and probably real estate too...and your job? Bye bye.

Depends. I can see cash become worth less as the government tries to print itself out of debt, but that usually comes before bankruptcy. It might even be better for cash if the government simply goes ahead an defaults before they start running the presses overtime!

Private borrowing might become easier as money moves from public to private debt.

And as to stocks, well, if those companies are making what people want, a default on the national debt won't make much of a difference.

The trouble really comes from the actions of the government. If they just through up their hands there'd be little problem. But they have voters to payoff. And they'll be very angry when they find out they can't get their dole. I can see how the coming social unrest would hurt all those assets. Still, in the long term, the mounting debt does even MORE damage to things like stocks since they become targets of ever increasing taxes to support the debt. Bankruptcy would in effect look like a tax deduction.

But all that aside, it is fundamentally unfair for one generation to inherit the debt of another. We don't make children pay their parents debts when they die. Why should those children pay off a national debt they didn't create? Anyone that would lose money on government debt deserves the loss for knowingly trying to profit from a kind of slavery of later generations.

85 posted on 03/09/2007 2:47:07 PM PST by mc6809e
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To: Nuc1
Well, we'll probably be nuked before I can retire anyway.

Roger that.....Hey, we won't have to pay the mortgage though....course there won't be a house....., but hey, I have "nukealert", I'll know what's hot at least....agh, how do I turn off the italics..............

86 posted on 03/09/2007 3:01:00 PM PST by kickme (...at the window watching...and still not believing ANY of it...)
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To: mc6809e
But all that aside, it is fundamentally unfair for one generation to inherit the debt of another.

This is why the liberal deficit spenders in Congress and the White House need to be replaced ASAP.

87 posted on 03/09/2007 5:55:57 PM PST by The_Eaglet
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To: wordsofearnest
LOL Yeah but with my luck by then wood will be a hundred a board foot.

You know that things are going south when Lou Dobbs discovers that real inflation exceeds the CPI. I am beginning to believe the elite never shop. Of course I guess we can all eat cake. :D)
88 posted on 03/09/2007 5:59:05 PM PST by Nuc1 (NUC1 Sub pusher SSN 668 (Liberals Aren't Patriots))
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To: kickme
LOL

agh, how do I turn off the italics..............

I don't know how to turn them on!!
89 posted on 03/09/2007 6:02:45 PM PST by Nuc1 (NUC1 Sub pusher SSN 668 (Liberals Aren't Patriots))
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