Ouch.....David Walker's Interview in Newsweek:

[FinanceDude]

Warnings of a Fiscal ‘Tsunami’ | Newsweek Business | Newsweek.com

Yowza, he must feel like Chicken Little these days.........

[Sandy]

He has been trying to get this message out for a number of years. It is too big for most people and politicians to wrap their heads around. Delay will only worsen the pain.

[laurence]

I love this quote:

"Just for perspective, can you compare the size of this fiscal "tsunami" [to the size of particular spending programs]?
Well, you could decide not to renew the Bush tax cuts, you could eliminate all foreign aid, eliminate all earmarks, eliminate NASA, eliminate the National Endowment for Humanities and eliminate the entire Defense Department tomorrow, and you still wouldn't solve the problem."

Eh, but we'll worry about SS and Medicare later...

[travelover]

I wonder what is in David Walker's portfolio?

[Zoocat]

Quote:

Originally Posted by laurencewill I love this quote: "Just for perspective, can you compare the size of this fiscal "tsunami" [to the size of particular spending programs]? Well, you could decide not to renew the Bush tax cuts, you could eliminate all foreign aid, eliminate all earmarks, eliminate NASA, eliminate the National Endowment for Humanities and eliminate the entire Defense Department tomorrow, and you still wouldn't solve the problem."

It's only a "tsunami" if the rules remain the same, i.e. that everyone who is now entitled receives what they have been "promised." It's pretty clear that some downsizing of benefits is going to happen according to one's income.

In the interview he basically says that Medicare needs to be means tested.
When that happens, those of us with "middle class" income streams in retirement will not be able to rely on Medicare. I wonder what that will mean in terms of health insurance premiums?

It really puzzles me why more people aren't talking about this.

[Cut-Throat]

Quote:

Originally Posted by Oldbabe It really puzzles me why more people aren't talking about this.

Walter Mondale talked about this in 1984 when he was running for President. He said that He would raise taxes. (Do you remember the results of that election?)

Then Reagan came along with 'VooDoo' economics and convinced over half the country that he was a 'great president' with his Cut Taxes and Spend even more fiscal Policy.

Bush Jr. continues this today and as long as most of the American People believe in this fantasy, they will keep electing these nutjobs.

[Khan]

Quote:

Originally Posted by Cut-Throat Walter Mondale talked about this in 1984 when he was running for President. He said that He would raise taxes. (Do you remember the results of that election?) Then Reagan came along with 'VooDoo' economics and convinced over half the country that he was a 'great president' with his Cut Taxes and Spend even more fiscal Policy. Bush Jr. continues this today and as long as most of the American People believe in this fantasy, they will keep electing these nutjobs.

Cut taxes
Increase spending
Use what's left over to balance the budget

Repeal the laws of arithmetic

[Zoocat]

Quote:

Originally Posted by Cut-Throat Walter Mondale talked about this in 1984 when he was running for President. He said that He would raise taxes. (Do you remember the results of that election?) Then Reagan came along with 'VooDoo' economics and convinced over half the country that he was a 'great president' with his Cut Taxes and Spend even more fiscal Policy. Bush Jr. continues this today and as long as most of the American People believe in this fantasy, they will keep electing these nutjobs.

Yes, I remember Mondale's defeat very well.

What people believed was that supply side economics really worked during the Reagan administration and so it would work under Bush Jr. as well. People are not educated in economics so they don't know that Reagan ran up the national debt to pay for the tax cut and the military spending. Bush Jr. has done the same thing.

The reason why I'm puzzled is that almost everyone knows the national debt is humongous and that we have unfunded entitlements of SS and Medicare down the road. But still some people keep saying the debt is a small amount of the GDP and it doesn't matter. Others say that the national debt doesn't matter and give no comprehensible reason. I can't figure out what is at stake for the people who are lying. For surely they must have some agenda that overrules common sense.

[HobbyDave]

People don't save, they don't eat right, they keep smoking, they don't go to the dentist regularly, etc etc. In general, most people want "now" to be good, and 10 years from now is an eternity. Now imagine these two scenarios:

1. Person goes to the Doctor, Doctor says "Hey, if you don't eat right, you'll die within 10 years". Person goes to another Doctor and Doctor says that it seems if he just takes a 5 minute walk each day, the problem will go away. Person smiles, switches doctor and takes a 3 minute walk every few days.

2. Person goes to the Doctor, Doc says he'll die within 10 years if he doesn't eat right. Person goes to another doctor who agrees, and says he needs to make a change now or he'll die for certain. Person might actually change their eating habits.. at least there is a chance.

I think the same situation is true for financial problems. The "average" person doesn't understand deficits, taxes, government finances in general. Some smart analysts may say that there is a huge problem, government is going broke, etc. But if you keep reading, you find politicians, other analysts, etc disagreeing. They'll say the problem isn't nearly as bad, if you grow at x% at 17 years while increasing the tax basis and approving my comprehensive growth plan, we should be able to fund everything.

Basically my point is that government finances are too complex for the normal person, and with politicians always complicating matters, I find it hard to believe we'll ever get ourselves out of the mess. Perhaps that's why republics have a short life span, because inevitably people vote themselves into a corner and screw themselves for short term gain. My wife calls me a pessimist

[laurence]

England's Parliment was formed in the 13th Century, and was really flexing it's muscle by the 17th, today England is doing just peachy. I'm an optimist on democracy and it's cousin, the republic.

[TromboneAl]

Quote:

Person goes to the Doctor

Right. Scenario 2 from the doctor-politics analogy won't happen because the politicians know that if they tell the truth, there's always another politician who will lie and evade, and thus get elected.

[HobbyDave]

Exactly. That's why David says that he is worried that nothing will be done until we're just about doomed. Because in the political world, until your eye balls are bleeding and your legs have stopped responding, the "Doctors" will keep telling you that it's all the other Doctors fault, and you'll be just fine.

[Cut-Throat]

Quote:

Originally Posted by TromboneAl Right. Scenario 2 from the doctor-politics analogy won't happen because the politicians know that if they tell the truth, there's always another politician who will lie and evade, and thus get elected.

Yes, I always hear voters say that they want a politician to tell them the truth; but as Jack Nicholson said "They can't handle the truth"

[Gearhead Jim]

Quote:

Originally Posted by travelover I wonder what is in David Walker's portfolio?

Since he's not telling, perhaps some of our members would like to speculate...

[travelover]

Quote:

Originally Posted by Gearhead Jim Since he's not telling, perhaps some of our members would like to speculate...

Cut diamonds, Krugerrands and ammo.

[pedorrero]

My Dad is a good case in point: he was a "hard money" investor, but he was also a smoker. He finally did quit, after a heart attack, at soon after learning he had cancer. He died right on schedule, six months later, Age 67. It's also notable that his parents both lived into their 90s, and his brother and sister are both into their 80s and apparently in good health (and neither ever smoked.)