The Coming Generational Storm: What You Need to Know about America's Economic Future
Laurence J. Kotlikoff,Scott Burns | 2004-03-01 00:00:00 | The MIT Press | 274 | Economics
In 2030, as 77 million baby boomers hobble into old age, walkers will outnumber strollers; there will be twice as many retirees as there are today but only 18 percent more workers. How will America handle this demographic overload? How will Social Security and Medicare function with fewer working taxpayers to support these programs? According to Laurence Kotlikoff and Scott Burns, if our government continues on the course it has set, we'll see skyrocketing tax rates, drastically lower retirement and health benefits, high inflation, a rapidly depreciating dollar, unemployment, and political instability. The government has lost its compass, say Kotlikoff and Burns, and the current administration is heading straight into the coming generational storm. But don't panic. To solve a problem you must first understand it. Kotlikoff and Burns take us on a guided tour of our generational imbalance, first introducing us to the baby boomers-- their long retirement years and "the protracted delay in their departure to the next world." Then there's the "fiscal child abuse" that will double the taxes paid by the next generation. There's also the "deficit delusion" of the under-reported national debt. And none of this, they say, will be solved by any of the popularly touted remedies: cutting taxes, technological progress, immigration, foreign investment, or the elimination of wasteful government spending. So how can the United States avoid this demographic/fiscal collision? Kotlikoff and Burns propose bold new policies, including meaningful reforms of Social Security, and Medicare. Their proposals are simple, straightforward, and geared to attract support from both political parties. But just in case politicians won't take the political risk to chart a new direction, Kotlikoff and Burns also offer a "life jacket"-- guidelines for individuals to protect their financial health and retirement.
Reviews
I enjoyed reading this book. It has an excellent analysis of what's happening in our country. Its main shortcoming is that it is dated; a lot has happened including major increases in the National Debt. I would be interested in an update to this book by the authors reflecting the last 20+ months of economic change.
Reviews
This book does not play sides, politically that is. Authors did great research and their facts are right on. Politicians should be forced to read this book.
Reviews
This is, simply put, a real eye-opener. I've been saying for years that the economy was a house of cards (and the housing bust and present/coming recession are proving me right), but I had no idea. This will change some of what I do regarding my present and future finances.
I give the authors credit for the way they add in occasional humor in the book. It doesn't obscure the subject at hand, but lightens up an otherwise difficult subject.
Reviews
This is an absolutely incredible book. Anyone who is interested in the future of our Social Security System and the Medicare and Medicaid systems must read this book. The authors provide good, documented evidence to explain what is broken in these vital systems. The authors explain why current politicians' plans for reform will not work and need to be revised. Most importantly the authors also give their suggestions on how to fix Social Security and Medicare and Medicaid. This was a required reading in my college Economics class and as soon as I finished it I mailed it home for both of my parents to read.
Reviews
This book should be required reading for all high-school sophomores who are going to inherit the economic problems the authors lay out in the prologue. The more awareness my generation (x) and the younger generations get about the mounting economic conditions we will face within the next 25 years, the better prepared we will all be to fix, or at least adjust to them.
At times the book is a bit too academic and for that I give it only 4 stars but there are parts that you can skip and still not miss the authors' explanation of why we are doomed and what - possibly - we can do to mitigate the situation. Robert Shiller summarizes the points that the authors make below:
"There's a lot of frivolous criticism of our politicians, but this book hits the mark, convincingly documenting their biggest sin: the failure to account for the magnitude of a huge government deficit crisis. The accounting scandals of Enron, WorldCom, and Parmalat pale by comparison. Read this book so you can start preparing for much higher taxes in the future for you and your children."
--Robert J. Shiller, Yale University, author of Irrational Exuberance and The New Financial Order
Perhaps the worst part of all of this is that we CAN fix the debt obligations that are hanging over us but doing so would require massive sacrifices on behalf of all citizens (unlikely since so many of us "expect" the government to play a role in financing our retirement and healthcare) as well as for both sides of the political aisle to work together (even more unlikely in these partisan times when all the Dems and Republicans want to do is blame one another). Failure to grasp the gravity of a $54 Trillion debt obligation and its impact on the quality of our lives will only continue to erode the value of the dollar as more developing nations such as China, India and Brazil increase their ownership of the US by buying up Treasuries that the government continues to issue. Not good, especially when so many of our middle class jobs are being lost to these countries at the same time.
This is perhaps the most important issue of our time. Until voters are heard and a real politician runs on a platform to fix the escalating economic crisis that awaits us all, do what you can to prepare yourself; save as much as possible in both tax deferred and taxed accounts (the latter of which will benefit you in the future since you will likely be in a lower tax rate today than you will 20 years from now when the govt. has no choice but to raise personal income taxes to finance the debt). Also, go to the gao.gov website and click on "Fiscal Wake Up Tour" in the left hand gutter, then click on the CBS New Program 60 Minutes hyperlink. If you dont have the time to read this book, at least read this article and watch the video interview with the head of the GAO office. By that time, the message and its implications should be painfully clear to you.
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