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$700 billion bailout? You ain't seen nothin'
San Francisco Chronicle ^ | Sunday, September 28, 2008 | Brian M. Riedl

Posted on 09/29/2008 7:15:06 PM PDT by kabar

Think $700 billion to bail out Wall Street is expensive? Just wait. The mortgage meltdown is cheap compared with the coming fiscal firestorm fanned by unfunded Social Security and Medicare costs.

Together, these programs hold unfunded obligations totaling $41 trillion - 60 times larger than the proposed Wall Street bailout. And even this understates the difference, because $41 trillion is the current net value of the unfunded obligations over 75 years. The actual cumulative yearly deficits these programs face over the next 75 years are several magnitudes larger than $41 trillion.

[Snip]

The entitlement problem is simple to understand. In the 1960s, five workers paid the taxes for each retiree's Social Security and Medicare benefits. Today that ratio is just 3-to-1. The coming retirement of 77 million Baby Boomers will drive that ratio down to 2-to-1 by 2030. That means every two children born this year and who marry in 2030 will have to support themselves, their children - and the Social Security and Medicare benefits of their very own retiree. The cost will be staggering.

(Excerpt) Read more at sfgate.com ...


TOPICS: Business/Economy; Government
KEYWORDS: 110th; bailout; entitlementprograms; medicare
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The perfect storm is brewing. Bank failures, a burst housing bubble, entitlement program unfunded liabilities, and rising energy costs spell a major financial train wreck within a decade.
1 posted on 09/29/2008 7:15:07 PM PDT by kabar
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To: kabar
Yep. And if all happens on the Democrats watch, I will be happy to see them choke on it!

"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

2 posted on 09/29/2008 7:16:35 PM PDT by goldstategop (In Memory Of A Dearly Beloved Friend Who Lives In My Heart Forever)
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To: goldstategop

I don’t think it will strike so suddenly...I think they’ll be able to sink us more slowly.

It will be very, very bad.


3 posted on 09/29/2008 7:17:33 PM PDT by Gondring (I'll give up my right to die when hell freezes over my dead body!)
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To: kabar

I’m surprised that people in San Fransisco are willing to admit that the Welfare state will bankrupt us.

Anywa, am I the only one who thinks the government will just go back on their word and slash services, all the while promising ever new and thrilling programs?


4 posted on 09/29/2008 7:18:29 PM PDT by Tublecane
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To: kabar

I thought the Democrats and their publicists in the liberal media say there is no Social Security and Medicare crisis.
Just like they told us there was no crisis and Fannie and Freddie...


5 posted on 09/29/2008 7:18:58 PM PDT by counterpunch (Jim Jones was a Community Organizer)
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To: kabar

I thought the Democrats and their publicists in the liberal media say there is no Social Security and Medicare crisis.
Just like they told us there was no crisis and Fannie at Freddie...


6 posted on 09/29/2008 7:19:31 PM PDT by counterpunch (Jim Jones was a Community Organizer)
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To: Gondring

In 2017 SS goes into the red and Medicare goes into the red even earlier, i.e., circa 2013-14. The baby boomers are starting to retire. It is sooner than you think.


7 posted on 09/29/2008 7:20:54 PM PDT by kabar (.)
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To: goldstategop

We will all be choking.


8 posted on 09/29/2008 7:21:27 PM PDT by kabar (.)
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To: kabar
I didn't say it wasn't soon. I said it would be slow.

It will be soon...but they will play games to hide the full impact at first--just making it worse.

9 posted on 09/29/2008 7:22:33 PM PDT by Gondring (I'll give up my right to die when hell freezes over my dead body!)
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To: counterpunch

Our political leadership has failed us. They are more concerned about getting reelected, which is why they avoid addressing the big issues. When the sh*t hits the fan, they will all be pointing the fingers at one another and then asking the public to suck it up and accept higher taxes and reduced benefits.


10 posted on 09/29/2008 7:23:59 PM PDT by kabar (.)
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To: Gondring

Kind of hard to hide an elephant in a phone booth.


11 posted on 09/29/2008 7:24:52 PM PDT by kabar (.)
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To: kabar

Nonsense. I was forced to put my hard earned dollars in long before they were born.


12 posted on 09/29/2008 7:25:51 PM PDT by Inyo-Mono (No longer holding my nose to vote - McCain/Palin 2008!)
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To: kabar

Although the market failed today, NOTE THAT THE FED RELEASED $630 Billion today, AND, THE MARKET TANKED ANYWAY!!! The point of the post is that we have not seen anything yet. Correct.

Here is the bloomberg piece noting the non-effective release of vast funds in one day that failed to impress the market irrespective of the US Houses failure to pass a so-called ‘bailout’ bill..

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahwz_k5JvuB8&refer=home


13 posted on 09/29/2008 7:28:18 PM PDT by givemELL
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To: kabar
The mortgage meltdown is cheap compared with the coming fiscal firestorm fanned by unfunded Social Security and Medicare costs.

As I've said before, those costs are no problem at all - they simply won't be paid. Grandpa's going to be greeting people at Wal-Mart until he's 95 to pay his drug bill. ;)

14 posted on 09/29/2008 7:28:23 PM PDT by Mr. Jeeves ("One man's 'magic' is another man's engineering. 'Supernatural' is a null word." -- Robert Heinlein)
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To: goldstategop
Yep. And if all happens on the Democrats watch, I will be happy to see them choke on it!

Trust me no one will be happy it will suck big time

15 posted on 09/29/2008 7:28:46 PM PDT by al baby (Hi mom I know McCain couldn’t answer her in a flippant way, but IF HE COULD it would have nice to)
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To: Inyo-Mono

I just turned on the TV and was listening to Newt Gingrich talking to Greta on Fox. did I hear correctly that this bill had some kind of money going to Goldman Sachs that would have ended up in Paulson’s pocket?

If someone heard this let me know.


16 posted on 09/29/2008 7:29:03 PM PDT by kempster
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To: counterpunch

Some things fail because of the DemocRATS

Democrats Defend Fannie/Freddie from Regulation - 2004 Video and

McCain’s Early Recognition of Fannie/Freddie Crisis

http://www.youtube.com/results?search_query=Democrats+Defend+Fannie%2FFreddie+from+Regulation&search_type=&aq=f


17 posted on 09/29/2008 7:29:03 PM PDT by TribalPrincess2U (McCAIN/PALIN...THE CHANGE AMERICANS REALLY WANT—OBAMA..THE CHANGE THE WORLD'S TERRORISTS WANT)
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To: kabar

Great post, kabar. Thanks. Frederic Bastiat talked about this here...

Now, legal plunder can be committed in an infinite number of ways. Thus we have an infinite number of plans for organizing it: tariffs, protection, benefits, subsidies, encouragements, progressive taxation, public schools, guaranteed jobs, guaranteed profits, minimum wages, a right to relief, a right to the tools of labor, free credit, and so on, and so on. All these plans as a whole — with their common aim of legal plunder — constitute socialism.

But how is this legal plunder to be identified? Quite simply. See if the law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. See if the law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.

Socialists desire to practice legal plunder, not illegal plunder. Socialists, like all other monopolists, desire to make the law their own weapon. And when once the law is on the side of socialism, how can it be used against socialism?

Then abolish this law without delay, for it is not only an evil itself, but also it is a fertile source for further evils because it invites reprisals. If such a law — which may be an isolated case — is not abolished immediately, it will spread, multiply, and develop into a system.


18 posted on 09/29/2008 7:29:33 PM PDT by PGalt
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To: kempster

If so, these people are to be put out on the street,
They are not part of the greatest country on earth.


19 posted on 09/29/2008 7:30:24 PM PDT by TribalPrincess2U (McCAIN/PALIN...THE CHANGE AMERICANS REALLY WANT—OBAMA..THE CHANGE THE WORLD'S TERRORISTS WANT)
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To: Inyo-Mono

Those dollars don’t belong to you. Once they are put into SS and Medicare, they belong to the USG. SS is a Ponzi scheme. Those collecting it now are getting out far more than they paid in. That won’t be true for our children.


20 posted on 09/29/2008 7:31:28 PM PDT by kabar (.)
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To: kabar

That’s got to be the first story from the San Francisco Chronicle that I completely agree with.


21 posted on 09/29/2008 7:32:11 PM PDT by WackySam (The Constitution is not an a la carte menu.)
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To: kabar

Social security and medicare can be easily addressed, though no one has the guts to do it. Cancel the whole program now, and grandfather those people who’ve been led to believe in the lie (i.e., people within 15 years of retirement). There is no trust fund and no mandate to fund it. Social security is the biggest myth in American history—it’s just another tax that goes into the general fund. Originally conceived as an elaborate ponzi scheme, it was never thought that the originally minimal outlays would exceed the massive input. Changes in the 1950s and then the Great Society totally changed the system and have led to it being “unfunded”. But the law has always been clear—there is no legal obligation to fund Social Security and Congress can abolish it any time they want.


22 posted on 09/29/2008 7:32:28 PM PDT by Ilya Mourometz
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To: givemELL

This is a global problem. Everyone seems to believe the $700 billion bailout will solve the problem. As you correctly point out, there is no guarantee that this will work. We may be shoveling sand against the tide.


23 posted on 09/29/2008 7:33:22 PM PDT by kabar (.)
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To: Mr. Jeeves

Or living with his kids.


24 posted on 09/29/2008 7:34:29 PM PDT by kabar (.)
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To: kabar

...but we’ll still have money for “free” healthcare right?


25 posted on 09/29/2008 7:42:19 PM PDT by Tzimisce (How Would Mohammed Vote? Obama for President!)
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To: Ilya Mourometz
Social security and medicare can be easily addressed, though no one has the guts to do it.

The political will doesn't exist to make such changes.

Changes in the 1950s and then the Great Society totally changed the system and have led to it being “unfunded”.

The SS system has never been sound actuarily. In 1950 there were 16 workers for every retiree. Today it is 3.3 and by 2030 it will be 2. Both SS and Medicare [except for Medicare B] are on automatic pilot with increases not being tied to revenue.

The SS Trust Fund represents an unfunded liability, which is why it is included in the $9 trillion national debt under "Intragovernmental Holdings." The last time SS went into the red, Congress passed in 1983 P.L. 98-21, (H.R. 1900) that decreased benefits including raising the retirement age for full benefits from 65 to 67 and raised taxes. It was supposed to be a 75 year fix, but just 34 years later we will be in even worse shape, i.e., by 2017.

But the law has always been clear—there is no legal obligation to fund Social Security and Congress can abolish it any time they want.

Essentially, you are correct. Congress can change the rules anytime it wants and has done so. The SS earnings cap goes up every year. In 2000 it was $76,000. It is currently $102,000. The cap goes up faster than the COLA.

26 posted on 09/29/2008 7:45:47 PM PDT by kabar (.)
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To: kabar

Can’t we just borrow the money?


27 posted on 09/29/2008 7:46:24 PM PDT by MarDav
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To: Tzimisce
Why otherwise intelligent adults still believe in governance by self-congradulations is beyond me.
28 posted on 09/29/2008 7:47:03 PM PDT by ashtanga
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To: kabar
...coming fiscal firestorm fanned by unfunded Social Security

The "October Surprise" a few years from now will be Social Security's broken by folks using "disability" as "welfare without pesky social workers". Some will be on for 50 and 60 years.

Go down to your local Social Security Office - - a third of the people signing up are in their late twenties.

29 posted on 09/29/2008 7:54:50 PM PDT by GOPJ
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To: kabar

I believe the next big bailout class will be states or municipalities that are ‘too big to fail.’

I may be entering tin foil hat territory, but I think that’s why democrats were so ready to push this bailout for President Bush. If it passed, it would have been very tough to say no to a state or big city.

Picture a dimowit press conference, “You mean we bailed out Wall St but can’t help (insert indebted state here)? Oh, and it’s Bush’s fault.”


30 posted on 09/29/2008 7:55:58 PM PDT by javachip
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To: MarDav
Right now 17 cents of every dollar is spent on servicing the national debt. The more money you borrow, the less you have for other purposes.

How Does the National Debt Affect Me?

31 posted on 09/29/2008 7:57:35 PM PDT by kabar (.)
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To: GOPJ

According to 2005 data, 48 million Americans receive Social Security benefits, including 33 million retirees, 7 million survivors, and 8 million disabled workers.


32 posted on 09/29/2008 7:59:41 PM PDT by kabar (.)
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To: javachip

It is a slippery slope once you make the federal government the guarantor of all debt—coporate, individual, or governmental. Eventually, the USG collapses.


33 posted on 09/29/2008 8:02:00 PM PDT by kabar (.)
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To: kabar

Eh, those are non-issues. Our taxes will just go up. That means tax rates (which will also become progressive) will increase as well as the caps on income will be removed altogether.

Sooner or later Dems will figure out that the federal payroll taxes are the most regressive taxes in the US and it will turn into a national crisis.

By that time I will be living on a boat, a man with no country, because my country is no more.


34 posted on 09/29/2008 8:09:22 PM PDT by Harry Wurzbach (Rep. Thaddeus McCotter is my hero.)
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To: MarDav

No, Chi/coms aren’t lending anymore $$$


35 posted on 09/29/2008 8:13:43 PM PDT by DirtyHarryY2K (If my replies are short & sweet I'm texting from my cell phone and I'm all thumbs...)
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To: counterpunch

Yup. I definitely heard the dems say that.


36 posted on 09/29/2008 8:20:10 PM PDT by Paraclete
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To: kabar

Nobody will be retiring. You know the vast majority of retirement plans are invested in the stock market. Makes for some not so pleasant changes.

Maybe now the adult children will take care of their parents the way they should rather than dumping them on the taxpayers to take care of.


37 posted on 09/29/2008 8:23:54 PM PDT by mabelkitty (Failing to provide a tax-burdened bailout is like putting a horse's head in bed with Wall Street)
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To: kempster

Paulson sees the apocalypse coming and decided he needs a $700B trust fund to weather the storm. And he decided to cut Bernake in on the action too.


38 posted on 09/29/2008 8:29:28 PM PDT by rbg81 (DRAIN THE SWAMP!!)
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To: kabar

The stock market loss today ALONE cost investors (that’s pension funds, kids’ college funds, etc.) $850-billion—that’s greater than the $700-billion price tag of the bailout.


39 posted on 09/29/2008 8:31:56 PM PDT by MHT
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To: kabar

And what was it in 2007?


40 posted on 09/29/2008 8:37:37 PM PDT by GOPJ
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To: Tublecane
Anywa, am I the only one who thinks the government will just go back on their word and slash services, all the while promising ever new and thrilling programs?

Why, yes. I believe you are. It is my personal belief that there will be a Special Representative assigned to each of us old folks who will personally escort us through the Looking Glass. Once on the other side, after refreshments, of course, we will be shown where to find the large pot of money and other valuables that will have been set aside in our name.

Next question?

41 posted on 09/29/2008 8:56:55 PM PDT by RobinOfKingston (Man, that's stupid ... even by congressional standards.)
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To: kempster

i saw it. Pissed me off royal! These politicians never learn! our countries finances are tanking and its still politics as usual.


42 posted on 09/29/2008 9:06:58 PM PDT by annelizly
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To: mabelkitty
Nobody will be retiring.

Not everyone will have the option to continue working. And with immigration, legal and illegal, many Americans won't have jobs.

43 posted on 09/29/2008 9:24:21 PM PDT by kabar (.)
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To: GOPJ
Social Security paid benefits of $546 billion in calendar year 2006. There were 49 million beneficiaries at the end of the calendar year.

Social Security paid benefits of $585 billion in calendar year 2007. There were almost 50 million beneficiaries at the end of the calendar year.

44 posted on 09/29/2008 9:28:34 PM PDT by kabar (.)
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To: kabar

Anyone want to chip in and buy an island somewhere and start our own country? I’m not joking. We can call it Freeper Island. We’ll be self-reliant.


45 posted on 09/29/2008 9:32:25 PM PDT by Hildy ("We do not see things as they are. We see things as we are.")
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To: Hildy

Sort of like Mutiny on the Bounty.


46 posted on 09/29/2008 9:38:15 PM PDT by kabar (.)
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To: kabar
The perfect storm:


47 posted on 09/29/2008 10:28:57 PM PDT by M. Espinola (Freedom is not 'free'.)
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To: Hildy
Anyone want to chip in and buy an island somewhere and start our own country? I’m not joking. We can call it Freeper Island. We’ll be self-reliant.

I love it!

48 posted on 09/29/2008 11:44:21 PM PDT by b9 ("Maybe you should revisit your assumption..." ~ Sarah Palin)
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To: kabar

Sorry, I forgot the sarcasm tag...


49 posted on 09/30/2008 3:37:58 AM PDT by MarDav
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To: M. Espinola

Great graphic.


50 posted on 09/30/2008 5:28:26 AM PDT by kabar (.)
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