Posted on 10/04/2006 10:47:36 AM PDT by SDGOP
Unless Social Security and Medicare are revamped, the massive burden from retiring baby boomers will place major strains on the nation's budget and the economy, Federal Reserve Chairman Ben Bernanke said Wednesday.
"Reform of our unsustainable entitlement programs" should be a priority, he said in prepared remarks to the Economics Club of Washington. "The imperative to undertake reform earlier rather than later is great," Bernanke added.
It marked the Fed chief's most extensive comments to date on the challenges facing the United States with the looming retirement of 78 million baby boomers.
In his remarks, Bernanke did not offer Congress and the Bush administration recommendations on how the massive entitlement programs should be changed. Efforts by the administration to overhaul the Social Security program _ once a centerpiece of President Bush's second-term agenda _ sputtered last year, meeting resistance from Republicans and Democrats alike.
As the population ages, the nation will have to choose among higher taxes, less non-entitlement spending by the government, a reduction in spending on entitlement programs, a sharply higher budget deficit or some combination thereof, Bernanke said.
Government spending on Social Security and Medicare alone will increase from about 7 percent of the total size of the U.S. economy to almost 13 percent by 2030 and to more than 15 percent by 2050, he said.
Bernanke declared: "The fiscal consequences of these trends are large and unavoidable."
The government recorded a budget deficit of $319 billion last year. This year's red ink is projected by the White House to total around $296 billion.
Financially shoring up Social Security and Medicare will involve difficult choices by lawmakers and other policymakers, Bernanke said.
For instance, if the government tried to finance projected entitlement spending entirely by revenue increases, the taxes collected by the federal government would have to rise from about 18 percent of the total size of the economy to about 24 percent in 2030, he said.
In his speech, Bernanke did not discuss the future course of interest rates.
The Federal Reserve meets next on Oct. 24-25, and many economists believe the policymakers will leave rates unchanged for the third meeting in a row.
With the economy slowing, the central bank in early August decided to halt _ for the first time _ a two-year long campaign to boost interest rates to fend off inflation. Policymakers suggested that the cooling economy would eventually lessen inflation pressures.
There's been relief on the inflation front as once-surging energy prices have settled down. Gasoline prices, which had topped $3 a gallon in the summer, have slid and are now averaging $2.31 a gallon nationwide, the Energy Department says.
You have a problem with what he said?
Should read.... Illegal immigration threatens retirements of baby boomers.
Meanwhile our political leaders stick their fingers in their ears and say "la-la-la-la-la-I'm not listening-la-la-la-la-la".
No, i have no problem with what he said. My problem is all these baby boomers who didnt plan for retirement and are goin to screw my generation over by demanding we pay for theirs.
bump
I vote for option three.
We need to find a way to phase things our gracefully, so that we don't get screwed too bad and you don't get screwed too bad. The problem is that those things were publicly financed instead of private.
I understand your self-interest, but I'm sure you don't want to cut out medicare and have your parents wind up in the poor house because of unexpected medical bills wiping out their savings. After all, when they paid their taxes for that, they thought it was like insurance.
What do you suggest?
Berneke left out the most obvious option.... and one that should be added.
START BRINGING IN ILLEGALS BY THE TRAINLOADS AND THEY WILL PAY THE
BENEFITS OF RETIRING BABYBOOMERS. (SAC OFF)
"My problem is all these baby boomers who didnt plan for retirement and are goin to screw my generation over by demanding we pay for theirs."
Why don't you PROVE that baby boomers "didn't plan for retirement" to a greater extent than other generations?
Baby boomers, who have paid for earlier generations' retirements all their working lives, don't whine like you do.
For one thing, give benefits to people on it now, and drastically cut benefits for people who won't be collecting it for some time. This way thep eople who are on it now aren't screwed, and people decades down the line will have no choice but to come up with a way to take care of themselves.
Can no person say....PONZI SCHEME?
May I amend your statement?
No, I have no problem with what he said. My problem is all these baby boomers who didn't plan for retirement and are goin to screw my generation, AND THE BABY BOOMERS WHO DID PLAN FOR RETIREMENT, over by demanding we pay for theirs.
I pick the highlighted item.
You forget, that you baby boomers who paid all your life paid MUCH LOWER rates. Today tax rates are high, and they will get higher. There's a big difference there. If you want proof baby boomers didn't plan for retirement, only 1/4th of people over the age of 50 have savings of 250k+, 1/3rd have nothing, the rest have a median of around 10k or so i think. That sounds like a lot of planning if you ask me.
Make no mistake, if something isn't done to solve this problem quickly there will be a massive young vs old crisis in our society. Young people just aren't going to tolerate tax rates in the 60's and 70's to bankroll people just sitting around for 30 or 40 years.
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