Saturday, November 01, 2008

Call this a Crisis? We haven't seen nothing yet!

David M. Walker, former U.S. Comptroller General, one man who knows the inside economic picture far better than most, wrote the following in Fortune magazine:

Let's take a look at the potential catastrophe that awaits us once we survive our current crisis.

The entitlements due from Social Security and Medicare present us with a frightening abyss as 78 million Americans come of age. The costs of these current programs, along with other health-care costs, could bankrupt our country. Even if the economy were to grow at the level of 3.2% a year, as it did in the 1990s, they wouldn't come close to addressing our federal financial problem.

The U.S. Government Accountability Office (GAO), noting that the federal balance sheet does not reflect the government's huge unfunded promises in our nation's social-insurance programs, estimated last year that the unfunded obligations for Medicare and Social Security alone totaled almost $41 trillion. That sum, equivalent to $352,000 per U.S. household, is the present-value shortfall between the growing cost of entitlements and the dedicated revenues intended to pay for them over the next 75 years.

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