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Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It Paperback – June 16, 2005
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From Publishers Weekly
For years, Peterson, secretary of commerce under Nixon and author of Gray Down, has been a compelling Cassandra, warning that the mix of growing debt, an aging population, and deficits in Social Security and Medicare portend disaster. Now, he laments, Republicans pursue reckless supply-side economics and Democrats, assuming a repeal of Bush's tax cuts would enable new government spending, are unwilling to consider limits on entitlements. Citing study after study, the author shows that it is a failure of leadership, not knowledge, that has let deficits loom. Beyond that, add the new burdens imposed by September 11—and the fact that European countries, aging like us, likely will have less money for security and international aid. Peterson attacks 10 partisan myths, among them that means-testing federal benefits will shred the safety net; that the elderly are poorer than children, that Americans are overtaxed and that using tax cuts to shrink government can work. What went wrong? He blames interest groups, individualism, short-termitis and generational change. Peterson offers concrete solutions: among them: index Social Security to prices, not wages; use the federal employees' health plan as a model; force Congress to include unfunded retirement obligations in its balance sheet; and pursue more nonpartisan politics, such as free TV time during campaigns. A self-described "fat cat," Peterson is willing to bear an "affluence test" for Social Security; he challenges leaders to revive JFK's call for civic responsibility.
Copyright © Reed Business Information, a division of Reed Elsevier Inc. All rights reserved. --This text refers to an out of print or unavailable edition of this title.
Peterson takes the role of an extraordinary flight attendant preparing 290 million passengers for a hard landing--but the landing he anticipates involves not jetliners hitting the tarmac but rather the entire American economy spiraling into insolvency. Basing his conclusions on one inescapable economic reality, Peterson argues that twin deficits in trade and government spending now require an astounding infusion of $4 billion in foreign capital every day just to avert economic meltdown in this country. And foreign investors are growing weary of propping up the U.S. economy while American political leaders ignore the perilously unbalanced government budget. Unfortunately, Peterson finds both major parties locked into pathologically rigid ideologies of denial. While Democrats push for ever-larger entitlements for ever-more interest groups, Republicans press for ever-deeper tax cuts. Neither party will initiate the reforms--succinctly outlined here by Peterson--essential to safeguard the country's long-term financial health. Sobering, urgent, and evenhanded. Bryce Christensen
Copyright © American Library Association. All rights reserved --This text refers to an out of print or unavailable edition of this title.
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The author, though right-wing himself, takes a refreshingly nonpartisan stance on issues and is able to rationally describe problems and what courses of action might be remedial.
If you're interested in the political economy, definitely pick this up!
Like Kotlikoff and Burns, Peterson's conclusion is NO. If corrective action is not taken soon, he says, our country is headed for a financial crisis.
The two books suggest different approaches for reforming Social Security and Medicare. Other experts have their own ideas, as do I, and that's fine. The most important thing at this stage is not the precise shape of the solution - it is convincing people that Social Security, Medicare and Medicaid must be restructured so that these benefits for seniors can be kept affordable over the long term.
Some people will resist this conclusion. In its 8/30/04 issue, for instance, Business Week asserted that "both books express extreme distrust of technology and warn the reader not to count on it to solve our problems." Really? History shows that the U.S. economic growth rate is unlikely to soar into the stratosphere. Even if it did, as the authors explain, Social Security benefits accruing to active workers are linked to wage levels (which should rise faster than prices due to productivity gain) and technological progress is a key driver for soaring healthcare benefits (everyone wants the most advanced care available).
Which of these books should you choose? It depends on what you are looking for. "The Coming Generational Storm" offers an economist's view of the situation and some useful financial advice for readers. "Running on Empty" does a better job of explaining how and why our political leaders (since FDR) have gotten us into this mess.
All our budgetary and social account projections have been based on Baby Boom birth rates--Social Security and all the other pay-as-you-go programs never took into account the short-lived nature of this phenomenon...as a result, we sit here in 2004 with a birth rate that just covers population replacement. This means there definitely won't be enough people to sustain the kind of tax revenues needed to support the bulging demand for social programs when the bulk of Boomers enter the retirement system (in about 10 years).
To date, no politician has been brave enough to tackle the necessary evils of cutting benefits, raising taxes, or both. Too many careers would be jeopardized if either one of those scenarios were to leave someone's mouth.
Not only are we a ticking time bomb here at home, but on a global scale too. Other issues are also in bad need of attention, such as trade, the dollar, and the other economies we feed by trade, investment, or consumption. We are not the only ones to soon be barraged by a massive graying population, followed by a much-diminished young worker population to support it with taxes. Think about all those Socialist and near-Socialist countries out there--they are ALREADY feeling the pain of a mostly-gray society with considerably less youth to support it.
The worst part--the environment hasn't even been put into the equation! You can imagine the environmental effects of all this political robbing-Peter-to-save-Paul, especially when we find out in the end that we're going to have to scramble for ourselves from now on. Uncle Sam is NOT an expert juggler, and balls will be dropped. We will eventually have to keep our own ball in the air to survive and thrive.
I'm extremely grateful someone had the courage to write this wake-up call of a book. I just wish the administration (whomever gets into office) would read it too and make adjustments accordingly...if they have the guts!
I recommend you read this book to see what you can do NOW to save your own skin while you still have one. I am not only reading it, but I'm following up with the author's think tank: the Concord Coalition. [...]
What this book taught me about government spending, though, was the real eye-opener. Take the national debt, add to it the commitments the federal gvt has made in the form of retirement and other social spending, and WE ARE ALREADY BANKRUPT.
We have to get our elected officials to change things immediately, or we need to elect new people who will.
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