Raison Debt M. M.
Raison Debt Speaking of high-stakes accounting, capital budgeting isn’t the only bright idea we need. Along with a mammoth investment shortfall, today’s twentysomethings are inheriting some...
...Most of the difference occurs because our government prefers not to count money it borrows from its own retirement trust funds as “debt,” or interest it pays to these trust funds for past borrowings as an expense...
...After 20 to 30 years on the job, the serviceman, who makes no contribution to his pension, retires on 50 to 75 percent of his highest pay...
...This windfall-which is only partially taxed and fully indexed against inflation-is funded by regressive and ever-increasing payroll taxes on workers who’ve seen their own real wages stagnate for two decades and who have no assurance the system will be there for them...
...But isn’t it about time we began to measure the impact on the next generation-publicizing the real increase in our debt...
...Raison Debt Speaking of high-stakes accounting, capital budgeting isn’t the only bright idea we need...
...The “surpluses” you hear about today-which in any event are being spent to cover the rest of the governmentwill be totally inadequate for tomorrow’s inexorable demographics...
...What Senator Terry Sanford of North Carolina calls a “cover up” amounts to more than $650 billion since 1985...
...If you think that’s wrong, you’re right...
...March on Washington...
...Consider: Two out of five civil servants retire before age 55, and at a percentage of preretirement pay that dwarfs that of programs in the private sector...
...but our debt-for which today’s kids are going to be on the hook-has gone up by more than $2 trillion...
...But what’s $95 billion a year between friends-or between generations...
...But what’s worse is that the “official” annual deficit wildly understates the increase in the national debt during the year...
...In the fiscal year that ended September 30, 1991, the “official” deficit was $269 billion...
...Some fiscal hairsplitters make the case that the official number, excluding intergovernmental borrowing, is actually the better measure of Uncle Sam’s impact on the private credit markets...
...What’s more, these pensions are by any standard the most generous in the nation...
...Here’s where the costliest liabilities lie: Social security...
...Since 1985, our published deficits have added up to almost $1.4 trillion...
...today the ratio is three to one and narrowing...
...Here’s the anatomy of the fraud...
...The bottom line...
...He’s also free to collect social security and pursue a second career to achieve the armed forces’ famed “triple dip” pension...
...Sound cushy...
...Only massive new tax increases on today’s young folks will prevent the system from going bankrupt when the postwar baby boomers hit the rocking chairs early in the next century...
...Rally your friends...
...As it turns out, the Greenspan Commission’s 1983 “fix” was just a band-aid...
...Because clearly our politicians won’t...
...Senator Sanford thinks so, and for three years has been peddling a bill that would do that...
...Disability criteria are so lax that more than one quarter of federal pensioners collect extra for being “disabled...
...Well, the median age for military retirement is only 41...
...Can this be fair...
...Federal pensions...
...How will today’s twentysomethings react when our politically powerful parents try to tax the pants off us in a few years to keep the checks rolling...
...Did somebody say “generational war...
...Otherwise, the trust funds (like social security) will be holding only worthless IOUs by the time we hit old age...
...As for fixing it-well, don’t just sit there...
...The $60 billion the federal government spent last year on retirement programs for its employees was more than it spent on higher education, consumer safety, AIDS research and treatment, Aid to Families with Dependent Children, food stamps, and low-income housing combined...
...While you won’t hear a peep from them until the next crisis looms, our politicians know what this math means...
...Facing the true debt will be a start...
...In the fifties, nearly 10 workers paid payroll taxes for every retiree drawing a check...
...And, if you’re in the media, spotlight the stakes every chance you get...
...But while the “official” deficit figures don’t count such intergovernmental debts, today’s young adults will one day have to honor them...
...Unreformed, these “entitlements” amount to an astounding $14 trillion in today’s dollars-with only a few pennies currently set aside...
...Along with a mammoth investment shortfall, today’s twentysomethings are inheriting some crushing but littlediscussed liabilities, courtesy of the government’s generous retirement programs...
...But the increase in the national debt for the year turned out to be $408 billion...
...Maybe...
...Contrary to popular myth, today’s retirees get back from the system between two and five times what they put in...
...If the government had to act like a business and put money in reserve each year against these and other “unfunded liabilities” (Medicare’s the other huge one), the budget deficit-officially projected at a record $362 billion in fiscal 1992-would double...
...How...
Vol. 24 • January 1992 • No. 1
