Sunday, September 19, 2010

The Entitlement Bubble

That's the title of an article in National Review Online. The author, Kevin D. Williamson, summarizes very succinctly why unaffordable entitlement programs are a nightmare prospect for both citizens and the US government. Here's a brief extract.

It’s easy to say: Well, we’ll just raise the retirement age, or cut benefits, or means-test them, or raise taxes on the wealthy who receive them (which amounts to means-testing, but Democrats like that version better). And, yes, that probably is what we will do, eventually. But that does not get us out of the economic pickle: People have been making decisions for years and years — decisions about saving, investing, consuming, working, and retiring — based at least in some part on what are almost certainly faulty assumptions about what sort of Social Security, Medicare, and other benefits they will receive when they retire. When those disappear, a lot of consumption is going to have to be forgone — and a lot of capital dedicated to producing those goods and services for consumption will be massively devalued. Businesses will have to retrench, probably in a way that is more disruptive and more expensive than the housing-bubble recession necessitated.

There's more at the link. Very important and highly recommended reading, particularly for all who are relying on Social Security and Medicare for their retirement. (Hint: start looking for alternatives. Now.)



Bill N. said...

How is that going to effect you since you are on a medical retirement?

MrGarabaldi said...

I never expected to have SS take care of me, that ponzi scheme is broker than one of obama's promises. I fully expect to after paying into the system not be able to draw since I will have too much money since I put as much into 401K and roths and other things as I can and there will be some income cap so all the freeloaders that pissed their money away can draw and the people that are responsible can't

George said...

Social Security is going to go broke, and lots of folks are never going to get their "benefits." The question is: do we face that today, or 20 years from now after we have broken the back of the economy trying to "save" it.