__ of the US. For instance, Germany "is sill looking at a 60 percent
87 long-run payroll tax rate to fund the combination of old age pensions,
__ health care, long-term care, accident insurance and disability" promised
__ by the current government rules. This is before any other government
90 spending. No matter what reforms are enacted, there are going to
__ be some unhappy campers in Germany in the coming decades. Either
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__ the future promises of Social Security and Medicare/Medicaid, the
112 number runs to somewhere around $45 trillion. Without any reform
__ that number grows to $54 billion by 2008. Future generations tax-payers
114 (read the young) are going to be left with this debt.
__
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__ Of course, as Kotlikoff and Burns point out, to not change the benefit
145 structure means an eventual almost doubling of the payroll tax. Try
146 telling future young workers they should pay 30% on payroll tax,
__ plus a huge hike in income taxes to pay for Medicare and Medicaid.
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__ There are no easy solutions or pain free way out. Part of the problem
151 keeping us from reform is that the distance between the two political
__ parties is so vast, and neither party wants to talk about the very
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__ if we were to gradually do it, it would mean gradual tax increases
165 or more government debt.
__
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__ they have been promised, and in full.
182 Social Security's Old Age Insurance payroll tax is eliminated and
__ replaced with equivalent compulsory contributions to something they
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__ major stock market.
187 A new federal retails sales tax used to pay off the accrued retirement
__ benefits owed under the old system.
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__
213 The national sales tax they propose to deal with the accumulated
__ benefits already due to future retirees would start at 12%. Over
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__
218 They then follow this up with reasons why the sales tax is not really
__ all that regressive, is certainly better than the current situation
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__ with all the currency problems and other issues? As bad as the US
225 debt may look, do we want to invest in a Europe where it is at least
__ twice as bad? Are there better ways to solve the problem? Maybe,
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__ out, it is immoral to obligate future generations - our children
249 - to pay for our debts.
__
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__ But even if the entire plan, or some form of it, were adopted, that
266 only solves about 20% of the long term debt problem. The real and
__ massive problem is Medicare and Medicaid. Without going into great
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__ a few thousand. Their math shows this would save another $27 trillion.
273 They would balance the rest of the future debt by a combination of
__ tax increases and limits on federal spending.
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__ we can simply grow ourselves out of. Yes, the study which shows the
278 $45 trillion debt assumes over time that we will be spending up to
__ 30% of our GDP on health care, which I seriously doubt is possible.
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__ for a burgeoning cohort of retirees. Under their plan, taxes and
293 government debt do not rise nearly as much as if we do nothing, but
__ it is not without pain, as the transition to massive forced savings
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__ when that time comes, it is going to mean a decrease in the available
299 funds for consumer spending, whether one time or gradual. Doing nothing
__ is going to mean a significant rise in taxes in the future. It will
301 mean a doubling of the payroll tax, at the very least.
__
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__ portfolios and other creative solutions part of their recommendations,
319 some as simple as owning your own home free of debt.
__
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fit,-1,doc.w,1,on,debt,reform,sales tax,payroll tax,consumer spending,
