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I wrote a few weeks ago that you should be nice to your children because some day, they will choose your nursing home. My question today is, will they be able to afford it?

For decades, both Republican and Democrat administrations have been downplaying how much trouble the baby-boom retirement years are going to cause for almost everybody in the country, for both the retirees, and the workers who'll have to support them.

The largest generation in America history, 77 million baby boomers, is about to reach retirement. For the first time in world history, there are as many old people as young people.

Paying the cost for those retiring, for Social Security, Medicare and Medicaid, may well swamp the American economy. That is because it will create a wave of debt so huge it is equal to a bill for $159,000 for every man, woman and child in the country.

Many millions of baby-boomers, at the height of their earning power now, are about to start plunging into their retirement years...and plunging America into a cash-crisis.

Professor Laurence Kotlikoff, head of Boston University's economics department, recently wrote the book on this looming crisis when he co-authored "The Coming Generational Storm." Kotlikoff said, "When Social Security was started up, there were about 30 workers per retiree. There were very few retirees initially. And now we're down to about three workers per retiree, and we're heading to about two workers per retiree."

International Monetary Fund economist Barry Anderson said, "The problem with the baby boom is that it was followed by a baby bust." That bust was partially created by Americans since Roe v. Wade aborting some 45 million babies -- in other words, millions and millions of what would have been the workers of the future.

And what with women having been forced into the workplace or choosing to be there in these last several decades, they've just naturally been having fewer children. Thus, the worker shortage and the coming cash crunch for the retiree system. But surely the government set money aside for this? No, it has not.

Mort Kondracke, a Washington columnist, commented, "The Social Security lockbox is a fiction. It goes in and then it comes right back out. The money is used up all the time. There is no savings account."

Congressman Jeb Hensarling (R-TX) is on the House Budget Committee. He said, "You have both Medicare and Social Security that will soon cash-flow negative. In other words, they're going to be sending out more money than they take in."

Surely he exaggerates? Not really. Right now Social Security, Medicare and Medicaid take just 7.5 percent of our total economy, as measured by gross domestic product (or GDP). But in just a few short decades, they'll suck up more money than is now spent on the entire U.S. government.

Kondracke said, "The Social Security, Medicare and Medicaid burden will be 20 percent of GDP. Well, 20 percent of GDP is what we spend on the whole government right now. So it will eat up the entire federal budget."

When you look across the decades ahead, it is going to take some $51 trillion to keep Social Security, Medicare and Medicaid afloat.

How much is that?

Professor Kotlikoff said, "You would need to immediately and permanently raise federal income taxes by 78 percent to come up with 51 trillion bucks today in present value. If we waited just five years, that tax hike turns into an 84 percent increase."

Indeed, what politicians are doing is digging the hole deeper by spending wildly, thus creating monstrous deficits and passing the bill to the same future generations who will already be crushed by paying the trillions owed in benefits to retired baby boomers.

One politician who has tried to head off this disaster is Rep. Hensarling. But a bill of his meant to limit the growth of government, was pounced on this year and killed by a huge majority of big-spending Democrats and Republicans.

Hensarling said, "Since I was born, the federal budget has grown seven times faster than the family budget. That's an unsustainable and unconscionable growth rate."

He added, "But these are highly politically-charged issues. And too often in this town we think about the next election, and not the next generation."

Kotlikoff remarked, "We have a total tidal wave of obligations coming at us, and Washington has got its head in the sand, and making the problem worse."

Economist Anderson commented, "You're either going to have to increase taxes on my children and grandchildren, cut benefits that are paid to us retirees, reduce the spending for all other government programs, or borrow from the future."

"Over the next 20 years," said Kotlikoff, "we're going to have to be raising taxes so dramatically to meet these benefit payments that younger generations are not going to have much money to save. It's all going to go over to Dad and Mom and grandparents, in term of benefit payments."

So what the Boston University professor is charging is this: basically, the generations of today are stealing the future wages of their children and their children's children. Professor Kotlikoff calls it a case of 'fiscal child abuse.'"

He said, "We're in a situation now where we're putting the American dream in severe jeopardy. We have a moral obligation to take care of our children and grandchildren, and we're systematically ignoring it."

He continued, "And we're going to have a government that is stuck in a situation where they're going to print money to pay these bills. That's going to spell very high inflation, if not hyperinflation. And we're going to look like a third-world country as a result of all this."

Kondracke remarked, "You know, you never hear either President Bush or John Kerry talking about this long-term menace that the economy faces. There is this gorilla sitting in the corner of the room ready to pounce on all of us, and they are pretending that it's not there."

"We can't have people in Florida running around with bumper stickers saying 'spending my kids' inheritances.' That's really immoral, " remarked Kotlikoff. "That's not where it's at anymore. We have to worry about our kids, worry about our grandchildren, and get our government to act accordingly. We have to act like adults."

Sobering thoughts, and just one more reason why we work so hard to keep you ahead of the herd.



Happy Thanksgiving To All!



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