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The Coming Generational Storm: What You Need to Know about America's Economic Futureby Laurence Kotlikoff
"[I]f one can fight one's way through the undergrowth of cliche, and avoid hyperbole above, there is a powerful line of argument running through the middle of this book. First of all, the authors have a point. The combination of increasing longevity, highly generous benefit entitlements and politically driven tax reductions is a dangerous one. The budget arithmetic which results does not add up. The authors focus almost exclusively on the position in the US, but the thesis they advance is certainly relevant elsewhere, too...." Howard Davies, The Times Literary Supplement (read the entire Times Literary Supplement review)
Synopses & Reviews
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 he 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, Medicare, and Medicaid. 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.
"[A] sobering look at an impending crisis with implications for all of us." Library Journal
"I lie awake nights worrying about the fiscal crisis described in The Coming Generational Storm. This is by far the single most important problem in U.S. economic policy. Every American should read this fabulous book." George Akerlof, University of California, Berkeley, Nobel Laureate in Economic Sciences (2001)
"Brilliant insights on the me generation versus the next generation. Better still, smart advice on equally vexing questions like whether to invest in a 401(k) or a second mortgage." Sylvia Nasar, author of A Beautiful Mind
"Among academic experts, Larry Kotlikoff has earned the title 'Mr. Generational Accounting.' His unfuzzy arithmetic decisively rebuts the Bush tax cuts, which are based on the delusion that 5 - 4 = 6, not 1. Read and judge for yourself the specter of our future: too many retirees dependent on too few working-age people. Fiscal imprudence now mandates broken promises later." Paul A. Samuelson, Massachusetts Institute of Technology, Nobel Laureate in Economic Sciences (1970)
How to avoid a fiscal crisis in the next generation — and how to protect yourself if the government acts too late: policy recommendations and individual strategies to protect against skyrocketing tax rates, drastically reduced health and retirement benefits, high inflation, and a ruined currency.
About the Author
Laurence J. Kotlikoff is Professor of Economics at Boston University. One of the nation's leading experts on fiscal policy, national saving, and personal finance, Kotlikoff is the author of Essays on Savings, Bequests, Altruism, and Life-Cycle Planning (2001), Generational Policy (2003), The Coming Generational Storm (2004), all published by The MIT Press, and other books.
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