"In taking from the young and giving to the old, year after year, decade after decade, in ever larger sums, Uncle Sam has, as indicated, run a massive Ponzi scheme. And he has sold his chain letter to the young with reassuring words that a Bernie Madoff might use: `Not to worry, Every dollar you hand over now in `taxes' (wink, wink) will be repaid many times over when you hit retirement and collect the terrific benefits I've promised you.'"
This quotation from page 29 of Laurence J. Kotlikoff and Scott Burns incisive new book "The Clash of Generations: Saving Ourselves, Our Kids and Our Economy" neatly and succinctly sums up the dire financial crisis we are facing in this country. For those twentysomethings who are just entering the workaday world the patently irresponsible fiscal policies promulgated by the federal government at the behest of older folks over the past six decades are going to have predictable and devastating consequences.....unless we change course. Authors Kotlikoff and Burns know a little something about this subject. They sounded the alarm in their 2005 book "The Coming Generational Storm". However, our leaders in Washington failed to take heed. Now in 2012 the authors are back with a new offering that explains in painful detail how we got here and goes on to present a thoughtful four-point plan to help us get out of this mess. Trust me this is essential reading for anyone who is concerned about the solvency of our nation.
When Social Security was created by FDR during the Great Depression the idea was to take cash from young workers too scared to spend it and give it to old people who had to spend it to survive. While many considered this to be a reasonable short-term solution at the time the long-term economic consequences of such a program are rather predictable: whenever you transfer money from savers to spenders the savings rate will decline. And this is precisely what has happened in America over the past six decades. Over the decades the economic fallout has been quite dramatic indeed. In 1951 our national savings rate was 16.1%. In 2009 it was a -1.7%! As Kotlikoff and Burns point out low savings=low investment=low productivity growth=low real wage growth. The fact is that average earnings per hour i this country when adjusted for inflation are no higher than they were in 1964. Meanwhile, people are living longer and the birth rate has declined substantially. Fewer and fewer workers are supporting more and more seniors. The numbers simply do not add up anymore and dramatic steps must be taken if we are to save our economy and our nation.
In the final chapters of "The Clash of Generations" Laurence J. Kotlikoff and Scott Burns offer up a comprehensive four-part solution they dub "The Purple Plans". The idea here is that these solutions should be acceptable to the vast majority of people in both "blue" and "red" states. The plan addresses four areas of concern including the banking system, health care, meaningful tax reform and overhauling the Social Security system. As I read over these proposals I was struck by the sheer common sense I saw in them. Very impressive indeed! Of course, none of this is going to happen unless the American people and our political leaders summon up the courage to do what needs to be done. "The Clash of Generations: Saving Ourselves, Our Kids and Our Economy" is a thoughtful and well-written book that will get you up to speed on these monumentally important issues. The time to save ourselves from a cataclysmic financial meltdown is running short. This is a "must read" for every American who cares about the future of our country. Highly recommended!
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Paul Tognetti (drifter51)
I guess I would qualify as a frustrated writer. My work requires very little writing and so since 1999 I have been writing reviews on non-fiction books and anthology CD's on amazon.com. I never could … more
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The United States is bankrupt, flat broke. Thanks to accounting that would make Enron blush, America's insolvency goes far beyond what our leaders are disclosing. The United States is a fiscal basket case, in worse shape than the notoriously bailed-out countries of Greece, Ireland, and others. How did this happen? In The Clash of Generations, experts Laurence Kotlikoff and Scott Burns document our six-decade, off-balance-sheet, unsustainable financing scheme. They explain how we have balanced our longer lives on the backs of our (relatively few) children. At the same time, we've been on a consumption spree, saving and investing less than nothing. And that's not to mention the evisceration of the middle class and a financial system that has proven it can't be trusted. Kotlikoff and Burns outline grassroots strategies for saving ourselves--and especially our children--from what could be a truly catastrophic financial collapse. Kotlikoff and Burns sounded the alarm in their widely acclaimed The Coming Generational Storm, but politicians didn't listen. Now the need for action is even more urgent. It's up to us to demand radical reform of our tax system, our healthcare system, and our Social Security system, and to insist on better paths to investment return than those provided by Wall Street (mis)managers. Kotlikoff and Burns's "Purple Plans" (so called because they will appeal to both Republicans and Democrats) have been endorsed by a ...