Specifically, the Chairman of the Federal Reserve, Dr. Alan Greenspan, believes it's time, once again, to declare the need to "trim" the social security and medicare benefits for the baby boomer generation. See: Yahoo news
From the link above: "Federal Reserve Chairman Alan Greenspan said Friday the country will face "abrupt and painful" choices unless Congress acts quickly to trim Social Security and Medicare benefits for the baby boom generation. He said the government has promised more than it can deliver."
The full text of the Chairman's speech can be read at:
Notable statements from the link above are:
"Early initiatives to address the economic effects of baby-boom retirements could smooth the transition to a new balance between workers and retirees. As a nation, we owe it to our retirees to promise only the benefits that can be delivered. If we have promised more than our economy has the ability to deliver to retirees without unduly diminishing real income gains of workers, as I fear we may have, we must recalibrate our public programs so that pending retirees have time to adjust through other channels. If we delay, the adjustments could be abrupt and painful. Because curbing benefits once bestowed has proved so difficult in the past, fiscal policymakers must be especially vigilant to create new benefits only when their sustainability under the most adverse projections is virtually ensured."
I particularly like the statements "Early initiatives" which translates into "the sooner we screw these people, the better off we'll be". As well as the statement: "we must recalibrate our public programs". He doesn't mention the fact that, for all their lives, people have paid into these programs, yet, by somebody's decree, the programs will be "recalibrated".
And this statement:
Aside from the comparatively lesser depth of required adjustment, our open labor markets should respond more easily to the changing needs and abilities of our population; our capital markets should allow for the creation and rapid adoption of new labor-saving technologies, and our open society should be receptive to immigrants. These supports should help us adjust to the inexorabilities of an aging population. Nonetheless, tough policy choices lie ahead.
And here's another subtle message: "and our open society should be receptive to immigrants". So we, as a nation, are going to rely on immigrants to bail us out simply because our government has mismanaged the programs to which all of the American citizens have contributed during their entire working lives. And I can't help but wonder why we need immigrants with thousands of Americans out of work.
Juxtaposed with this latest development is this article from Steven Roach of Morgan Stanley. From the link:
Saving is the sustenance of long-term growth for any economy. And yet America is lacking in saving as never before. It has finessed that shortfall by consuming the wealth generated by asset appreciation and by drawing heavily on the world's pool of surplus saving. In my view, there is nothing stable about this arrangement. In fact, there is a growing risk that America's saving shortfall will only intensify in the years ahead -- especially given Washington's total lack of fiscal integrity. As always, the flows will give the impression that this outcome is sustainable. In the end, nothing could be further from the truth.
So, it looks like we, as a nation, have no savings to speak of and, at the same time, Chairman Greenspan is declaring that congress pull the benefits rug out from under the baby boomer generation. Katy...bar the door!
What cracks me up about Chairman Greenspan's statements is that there is no mention of dealing with the current and future payments being made by the baby boomer generation. Only the reduction of the benefits they will receive for their contributions by, perhaps raising the eligibility age to 70 or 80 or 100. In other words, you will be expected to pay into the system until you drop dead.
Ironically, it looks like we are about to revert to an earlier time of self sufficiency when people took responsibility for their own welfare although we'll still be paying the taxes into a system that will probably never provide a return on our investment. This seems to make any discussion of government social programs moot, I would say.
