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Saturday, 12/22/2007 1:31:41 PM

Saturday, December 22, 2007 1:31:41 PM

Post# of 19057
10-round rumble Generational 'fight of the century' looms as taxpayers revolt

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After doing math with escalating debt, this article is valid.

~~~

Walker warns that by 2040 interest payments on the debt alone will exceed all the taxes collected, paralyzing the economy.

By Paul B. Farrell, MarketWatch

ARROYO GRANDE, Calif. (MarketWatch) -- Eyes on the center ring. The main event's coming much sooner than you expect. The great generational battle, a bruising taxpayers' revolt between two arch-enemies, older America and younger America, is destined to emerge as an ugly war. Start cheering! "Laaadies and gentlemen, let's get ready to rruuummmble!"

In this corner, wearing flashy red-white-blue sequenced leather trunks, big paunches and straddling Harleys and Bentleys, America's old' fogies sponsored by Corporate America and Wall Street lobbyists, the elite "Boomer" class that's selfishly amassing great wealth and McMansions for personal retirements while unloading massive public and private debts onto the backs of future generations. They live by a

"we-hate-all-taxes-but-love-deficit-spending" political strategy.
And in the opposite corner wearing Calvin Klein shorts and sponsored by MySpace, Apple and Google, you see America's future, the next "greatest generation," new high-tech virtual warriors, the "Millennials" as "60 Minutes" calls young Americans born since the early 1980s. They don't think much of their opponents, whom Millennials believe are wasting America for the rest of us with their out-of-control spending. "The nation is abandoning its children," says Millennial activist Anya Kamenetz in "Generation Debt."

Round 1: Politicians (and lobbyists) favor rich Aging Boomers
The most outrageous examples of the Aging Boomers class are the "greed-is-good" guys whose lobbyists just killed a bill that would have plugged a huge tax loophole granting special capital gains treatment to private equity, hedge funds, leveraged buyouts and Wall Street power players, guys who hate paying ordinary income tax like the rest of working Americans.
They are the extreme "poster boys" for the Aging Boomers. Gordon Gekko coined their motto: "Greed is good." They're not satisfied making a few hundred million, getting rich at the rate of ten thousand bucks an hour. Their egos need to be billionaires!
And since money is power, these Aging Boomers and their special-interest lobbyists now control the American government. They are responsible for running up huge deficits for future generations ... and that's creating enormous pressure for the coming taxpayers' revolt.

Round 2: Next 'great generation' gaining power and wisdom
Here's how "60 Minutes" described them: "The workplace has become a psychological battlefield and the Millennials have the upper hand because they are tech savvy, with every gadget imaginable almost becoming an extension of their bodies. They multitask, talk, walk, listen and type, and text. And their priorities are simple: they come first." Yes, and soon they'll take control.

One ad exec who's been following Millennials for years told " 60 Minutes:" "Some of them are the greatest generation. They're more hardworking. They have these tools to get things done. They are enormously clever and resourceful. Some of the others are absolutely incorrigible. It's their way or the highway. The rest of us are old, redundant, should be retired. How dare we come in, anyone over 30. Not only can't they be trusted, they can't be counted upon." Battle lines are drawn: Wake up, you old fogies!

Round 3: Entitlement deficits keep Aging Boomers in control
Yes, this battle will become the main event sooner than we all expected. In " The Coming Generational Storm," economics professor Larry Kotlikoff and Dallas Morning News columnist Scott Burns left us with the impression that our catastrophic unfunded $51 trillion Social Security/Medicare shortfall could be swept under the rug for some time, giving Aging Boomers, their lobbyists and politicians cover to keep passing the buck on to future taxpayers.

But now the lid's blown off. The generational war's exploding far earlier than the old fogies want. Yet, self-absorbed Aging Boomers remain in denial, ignoring the problems. And it's obvious from the evasive campaign rhetoric that politicians won't touch this killer "third rail." They hope a good fairy will wave a magical "deficits don't matter" wand and make the massive entitlement debt quietly disappear.
But Millennials are waking up. And wising up. They now see how they're being conned. Soon they'll jar the Aging Boomers out of their denial.

Round 4: Hidden time bomb in global shadow banking system
Moreover, the $51 trillion Social Security and Medicare debt is only part of the burden. Washington has become notorious at disguising how bad things really are. But add in other debt (government, consumer, mortgage, corporate), plus America's share of the debt hidden inside the $300 trillion in global derivatives, what Pimco's Bill Gross warns is a high-risk "shadow" banking system, the ultimate time-bomb that could bring down the global economy.

Add all that and you see how America's in debt way, way over our heads by more than $100 trillion. We've been living way beyond our means for too long. Today each one of our 300 million citizens is in debt by $330,000.

Round 5: Bankruptcy, when interest on debt exceeds revenue
How bad is this monster? David Walker, Comptroller General of the United States, head of the Government Accounting Office, America's auditor-in-chief is blunt: Unless Congress makes massive course corrections in the very near future, America's headed for "bankruptcy," while Asia and the oil-producing cartel are on a fast track to overtake us as the world's new superpowers.

Walker warns that by 2040 interest payments on the debt alone will exceed all the taxes collected, paralyzing the economy.

Round 6: Cut spending on Aging Boomer entitlements? No!
More evidence: The director of the Congressional Budget Office, Peter Orszag, recently wrote that "the nation's economic outlook may look troubling in the short run, but these difficulties pale besides the economic consequences" of our growing health-care disaster.

Continuing in the Wall Street Journal's OpEd pages, Orszag wrote: "The CBO projects that under current law, federal spending on Medicare and Medicaid measured as a percent of GDP will rise to 12% in 2050 and almost 20% around 2080 from 4% today." That's an unsustainable increase of 300% to 500% over today.

Round 7: Raise taxes on the young working Millennials? No!
On the surface we're in a stalemate because conservative Aging Boomers practice a strange hypocrisy: Their out-of-control spending is driving America into huge deficits, but they offer no repayment plans. Meanwhile, the clock's ticking louder, pushing trillions of new debt annually onto the Millennials. Worse yet, old fogies go ballistic at any hint of raising taxes. This denial tactic won't work much longer.
There are solutions: A few years ago Orszag and William Gale, a former member of the Council of Economic Advisors under the first President Bush, wrote: "Balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending."

They warned, however, that "such severe cutbacks seem unlikely for political reasons and unattractive for economic and social reasons." So the focus is on the one unspeakable alternative dreaded by Aging Boomers ... new taxes!
Round 8: Low blows! Aging Boomers sucker-punching Millennials
Why a taxpayer revolt? Because the Aging Boomers will insist they're entitled to their massive payments, even if they bankrupt America. Their lobbyists will tell politicians: "Social Security is a contract that must be honored; we put cash into a trust fund, it's our money, you owe it to us."

Round 7: Raise taxes on the young working Millennials? No!
On the surface we're in a stalemate because conservative Aging Boomers practice a strange hypocrisy: Their out-of-control spending is driving America into huge deficits, but they offer no repayment plans. Meanwhile, the clock's ticking louder, pushing trillions of new debt annually onto the Millennials. Worse yet, old fogies go ballistic at any hint of raising taxes. This denial tactic won't work much longer.

There are solutions: A few years ago Orszag and William Gale, a former member of the Council of Economic Advisors under the first President Bush, wrote: "Balancing the budget would require a 41% cut in spending on Social Security and Medicare, a 47% cut in discretionary spending, or a 17% cut in all non-interest spending."

They warned, however, that "such severe cutbacks seem unlikely for political reasons and unattractive for economic and social reasons." So the focus is on the one unspeakable alternative dreaded by Aging Boomers ... new taxes!

Round 8: Low blows! Aging Boomers sucker-punching Millennials
Why a taxpayer revolt? Because the Aging Boomers will insist they're entitled to their massive payments, even if they bankrupt America. Their lobbyists will tell politicians: "Social Security is a contract that must be honored; we put cash into a trust fund, it's our money, you owe it to us."

But eventually Millennials will rebel. They will resist paying new taxes required to cover the costs of cushy retirements for those Aging Boomers. If Millennials are going to pay big taxes, they want a government servicing their needs too.
Round 9: Big fight: aging entitlements versus young taxpayers
Unfortunately, as Orszag and Gale point out, entitlement costs will keep going up, up, up, indefinitely. That pressure will build as more and more Millennials (along with the "thirty-something" Gen-Xers who are putting their kids through college) are going to aggressively fight the growing pressure in a Washington run by special-interest lobbyists demanding tax increases to service the entitlements of Aging Boomers.
Why? Because that could cut services to Millennials and/or raise their taxes to pay for all the old fogies entitlements ... and that'll be the fight of the century, Vegas-style! Gimme a ringside seat!

Round 10: Punishing counter-punches as young taxpayers revolt
Aging Boomers dropped to mat. Knockout? Split decision? My money's on a new champion being crowned: "Greed is good" works, but only for so long. Then you get paunchy and punchy, your timing's off, you make mistakes. And you get decked by a young comer, a Millennial. A stunning hard left to the body. A lightening right cross to the jaw. You hit the mat, down for the count.

Folks, America is waiting for a new champ that's not self-centered, over-the-hill and greedy. We need change! And it's coming, very soon.

http://www.marketwatch.com/news/story/story.aspx?guid=%7B52DEF8AE%2DE29F%2D4E35%2D829F%2D531289F138ED%7D&siteid=rss




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