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.
That is the other half of this issue.
When the wave of boomer retirements hit, they will stop putting money into the 401 (k) and start taking money out. Which will depress the market.
Be aware that the 401(k) plans have large risks also
Ping list for the discussion of the politics and social (and sometimes nostalgic) aspects that directly effects Generation Reagan / Generation-X (Those born from 1965-1981) including all the spending previous generations (i.e. The Baby Boomers) are doing that Gen-X and Y will end up paying for.
Freep mail me to be added or dropped. See my home page for details and previous articles.
They certainly do, but they're getting to be all we've got. I think the only thing we can hope for is that the social chaos which would ensue if they all tank would be unthinkable. I have more than half a million dollars in mine and it's not nearly enough - fortunately, retirement is still more than ten years off. But I think a phased drawing-down of funds is the way to go; I don't think anyone is going to want the tax consequences of taking too much out at once.
Problem was republicans weren't ready for the offensive democrats would mount against it. Bush should have been more aggresive and also demanded a vote on the issue to see where people stood then worked from there.
Boomer Roger
Now that is just cruel.
Well, not my generation per se. It was a hippie/yippie fellow named Jerry Rubin who came up with that phrase and the media was so enamored of that kind of nonsense it got a lot of play. I think these inter-generational discussion would make more sense if we didn't generalize, because those generalizations wrongly insult a lot of good people.
I think boomers who weren't military or boomer women who didn't have kids, should have the benefits drastically cut.
US Navy, '66 to '70. Viet Nam '68 -'69.
There were a lot of us who weren't left-wingers, but you never heard much about that, because the MSM got so wrapped up in that "youth revolution" crap it tarred us all with the same brush.
Lol...You mean "kids they know about"..? Cut'em, unless they served in 'nam. My point was: there's only going to be so much money to go around. Make sure that it goes to those who've earned it: vets, and since women weren't really expected to be military in 50's & 60's, it's fair to include women who had kids (who are now working and paying into SS).
You can have my Navy pension when you pull it from my cold, dead, salty fingers...
Future retirees will be part time workers for life.
And..... you do understand the reasons that will never be implemented, don't you? :)
Thank you for your service to the USA.
There were a lot of us who weren't left-wingers, but you never heard much about that, because the MSM got so wrapped up in that "youth revolution" crap it tarred us all with the same brush.
Yes I know that many boomers get angry at that 'other half' of their generation (as do the rest of us)
Fair enough, you can take my guns when you pry them from my cold dead fingers
Because boomers control everything...?
Just wait. Baby Boomers are just starting to retire.
We see certain companies scaling back pension plans.
Now we have to see some local governments do the same thing, such as San Diego. What do you think will happen if their pensions are cut.
They were wrong.
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