Your attic is on fire. A neighbor pounds on your door, yelling at you to get out. You ignore his warning but ultimately escape, although...
Your attic is on fire. A neighbor pounds on your door, yelling at you to get out. You ignore his warning but ultimately escape, although your house burns to the ground.
Now take this story to a national level. Our country’s fiscal attic is on fire: There’s too much debt and not enough revenue, and the flames of economic catastrophe are licking at our heels. A few brave souls bang on our doors to warn us, but we don’t listen.
It’s called, “fiddling while Rome burns.” Google it, and you’ll see it means “heedless and irresponsible behavior in the midst of crisis.”
The crisis is a combination of problems that are fast coming to an explosive head: too much national and individual spending, not enough savings, not enough revenue to cover costs, too many people focused on “me” rather than “we,” and a rapidly aging population that will soon begin dipping into promised benefits that, unless we do something severe, probably won’t be there.
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According to “America At a Crossroads,” a speech in October by my personal hero, David M. Walker, U.S. comptroller general and head of the Government Accountability Office (GAO), here are a few symptoms:
Federal debt is out of control due to massive spending and major tax cuts. The total U.S. fiscal burden — its unfunded liabilities over the next few decades for such future commitments as health and retirement benefits to baby boomers — has soared to $46 trillion. This translates to a debt of $411,000 per American household (which, in 2005, had an average annual income of just $45,000).
Personal savings have fallen dramatically. In 2005, they sank to levels that haven’t been seen since the Great Depression. America now has the lowest overall savings rate of any major industrialized nation. This is happening as 78 million boomers near retirement, as pensions disappear and as health care costs soar. Like the federal government, many individuals are living beyond their means.
An attitude of entitlement is pervasive, yet the growth in benefit programs such as Medicare, Medicaid, and Social Security is close to bankrupting the nation. According to the Medicare Trustees, the 2004 Medicare prescription drug benefit alone — one of the most expensive entitlement programs of all time — comes with an $8 trillion price tag over the next 75 years. By 2030, Social Security’s expenditures are expected to grow by 147 percent in constant dollars, while Medicare will increase by 331 percent.
If we haven’t closed this fiscal gap by 2040, says the GAO, taxes will need to be increased by 60 percent or total spending reduced by a third. “Sudden, drastic changes of either kind are outside post-World War II historical experience in this country,” reports the GAO.
In reality, the impact will be felt long before 2040, with cuts in every segment of what we now think of as “government”: national defense, homeland security, veterans’ health benefits, national parks, highways and mass transit, foreign aid and others. It will hit state budgets hard as well as K-12 education, housing, higher education, environmental protection, drug programs, prisons. If you’ve paid attention, it’s already happening.
But worse will be the impact on our children and our children’s children — and their children’s children — who will be left holding the bills for our mistakes.
In the recent elections, I didn’t hear talk of this coming fiscal train wreck. With the elections now over, there’s still no discussion, even from the winners. The reason: The solutions will be incredibly painful.
But we must begin. We must start paying attention. Clearly, our way of life is not sustainable.
Thank goodness a movement is afoot to rock us off our apathy and get us working to find the fixes, and it comes in the nick of time.
It’s called the “Fiscal Wake-Up Tour.” Sponsored by organizations with normally diverse economic viewpoints from the left-leaning Brookings Institute to the right-leaning Heritage Foundation and others, its experts are traveling the country to sound the alarm. It started in 2005, and has now hit 13 cities. The next stop is Seattle.
On Nov. 29, the national “Fiscal Wake-Up Tour” will address the public at a luncheon forum at the Westin Hotel in Seattle. Hosted by the University of Washington’s Evans School of Public Affairs, Seattle CityClub and the Concord Coalition, the agenda promises to be a “brass tacks discussion” of why rising health-care costs, changing demographics, inadequate national savings, the impending retirement of the baby boomers, and many more factors make our current fiscal policy unsustainable and what we need to do to undo the damage.
Walker will be a speaker. Advance reservations are required. Luncheon time: noon to 1:30 p.m.; registration 11:30 a.m. Cost: $35 for CityClub members, $45 for the general public. You can register online at www.seattlecityclub.org or call 206-682-7395.
For excellent information about the Fiscal Wake-Up Tour, its messages and its participants, go to www.concordcoalition.org.
Liz Taylor’s column runs Mondays in the Northwest Life section. A specialist in aging and long-term care for 30 years, she writes and conducts workshops on aging issues. E-mail her at email@example.com or write to P.O. Box 11601, Bainbridge Island, WA 98110. You can see all of her columns at www.seattletimes.com/growingolder/.