Dick Morris writes: Former Fed Head Alan Greenspan Warns of Massive "Entitlements Crisis" that Nobody Is Talking About. Last January, U.S. government debt surpassed a record $19 TRILLION.
It took over 200 years to rack up the first $1 trillion in debt. But would you believe that Washington has racked up the last $1 trillion of debt in JUST 14 MONTHS?
Deficit spending is parabolic, and it's destroying the savings of unsuspecting Americans. Former head of the U.S. Fed Alan Greenspan put it simply: "Deficit spending is simply a scheme for the confiscation of wealth."
But while the U.S. debt is hurtling toward $20 trillion, there's another economic time bomb that's ticking down until it explodes...
This Is the "Economic Time Bomb" Alan Greenspan Worries About Most Greenspan is warning of a pending "Entitlements Time Bomb."
The problem, he says, is that welfare programs like Social Security and Medicare are legal entitlements that have nothing to do with real-world economics.
When somebody reaches a certain age, they are legally entitled to benefits - whether the government is able to pay for them or not. And right now, the government doesn't have the means to pay. Greenspan says..."I don't know how it's going to resolve, but there's going to be a crisis."
How can one be so sure about the coming crisis? If you look at the numbers, it's a mathematical certainty: Since 2010, Social Security has been paying out more than it has collected in taxes. And as millions of Baby Boomers retire, the shortfall gets even bigger.
You Can't Count on Washington to Address This Crisis. Our elected officials aren't doing a thing to avoid this fast-approaching catastrophe. Greenspan says:
"Entitlements are considered the third rail of American politics. You touch them and you lose. Republicans don't want to touch it. Democrats don't want to touch it. You will never hear one word from either side."
Since Washington won't deal with the problem, the U.S. is like a high-speed train flying for a solid brick wall. Upon impact, there will be financial carnage at every level - from big government down to the average retirement account.
We need to put healthcare and education on a diet to wring out the overcharges, cost reduce these line items and end all federal funding gradually over 10 years.
Social Security should have been privatized decades ago, but it still needs to be done. But everybody is living on Social Security checks and that’s the only entitlement the government should not cut.
In any event, the debt needs to be stopped at $20 trillion and that means a balanced budget by 2018. This is possible and is necessary; there is more than $1 trillion in federal waste.
All non-essential federal expanses need to be reduced and all unconstitutional federal activities should be returned to the States. Then the federal government can concentrate on maintaining the military and paying off its debts and unfunded liabilities and very little else.
The conversion of Social Security will come at a high cost and will need to be funded by the federal government. If we fix social security correctly, we will allow younger participants to direct their Social Security “taxes” to their own accounts to invest. At the same time, the government will need to keep paying Social Security benefits to older beneficiaries. This will cost the government an extra $1 trillion a year for 20 years.
The same goes for repaying the National debt. Government will have to pay interest and principle on this $20 trillion debt for 20 years.
With luck, we could be out of debt in 40 years. Which one do you want to do first.
Norb Leahy, Dunwoody GA Tea Party Leader