Rating: 
Summary: Packed With Knowledge!
Review: This volume is infinitely more thoughtful than most of the books that point to the expected insolvency of the Social Security system and pronounce that the fiscal sky is falling. After all, the U.S. economy has weathered plenty of fiscal crises before, but those in power have barely addressed this one. Authors Laurence J. Kotlikoff and Scott Burns ask you to realize that the government is saddling your children with unbearable debt. One by one, they strip away all the supposed answers to the demographic bulge and economic bust that characterize the impending mass retirement of the baby boom generation. They demonstrate that the dwindling number of working-age citizens simply will not be able to support the coming onslaught of retirees. The python has eaten the rabbit, but will it be able to swallow? Kotlikoff's "generational accounting" explains that government is running up charges on our kids' credit cards. And like any bill that doesn't get paid, this one will keep getting bigger. We recommend this nicely crafted book to all responsible citizens.
Rating: 
Summary: The Sky Is Falling!
Review: What an astounding example of literary rubbish to complement the current oh-my-god-ss-is-going-to-run-out cries from chicken little, AKA, the warrior! no the peace! no, the warrior! pRe$ident and his monied minion$ in Congre$$. The writers of this crap perform great feats of mental gynastics to place blame entirely at the feet of entitlement programs. What an astonishing coincidence we have here...the very *same* programs that have helped keep the heads above water of those of us who *aren't* trust fund babies are the very same programs the trust fund baby/leaders now want to dismantle. What they haven't gone to great lengths to explain however is to point out that the entire American economy is predicated on consumer debt and we are Ownd by Chinese and Japanese banks who keep subsizing our debt so we can continue to afford their cheap crap. Don't waste your time reading this book. All you have to do to spare your eyes is switch on the TV and tune into Fox News, the official Pravda channel of the United States of, by and for the corporate fascists of America.
Rating:
Summary: If you care about your children - and everyone else's
Review: With luck and good living I might live to 2050. My children and their children will see the second half of the 21st century and maybe beyond. Laurence and Scott woke me up to the future that my progeny might have to live in.
A summary of the book is included below, but the important things about this book are:
- it is meticulously researched and well written
- it will make you think about government accounting in a new and fundamentally different way
- it will make you question whether you yourself are behaving farily toward your own children
- after scaring you (and rightfully so) Laurence and Scott will give you hope that the future is not yet written, and suggest practical strategies that you can adopt to improve your own financial future.
Book Summary:
Kotlikoff and Burns have constructed a new way of understanding (primarily U.S.) government economics and forecast a demographically driven economic collision between old and young.
The authors dedicate this work to their 10 grandchildren who are identified by name. They predict that their grandchildren - and ours - will encounter a country whose collective population is older than the current population of Florida. That this situation will be prevalent throughout much of the industrialized world, including China; that we will have a population age profile that reflects "the greatest demographic change in human history"; changing from forever young to forever old; that a new segment has emerged which is the fastest growing population segment; people over 85 years of age. They rely on Bureau of the Census figures that forecast growth of the 85+ segment - from 4,259,000 in year 2000 to 13,552,000. in year 2040. This, and other population trends, will change the ratio of gold-ages to "kids" from 1.8 to 3.0, with all the consequences of supporting an aging population with fewer workers contributing to social programs that were built on a completely different set of assumptions.
The U.S. social programs we have today are largely a creation of a time when "old people" were expected to die shortly after retirement. The basic assumption was a high ratio of working people to retired people. This high ratio made possible a transfer system where each working generation supported the retirement of prior generations. Kotlikoff and Burns report on the reduction in the ratio of workers to beneficiaries: 16.5 to 1 in 1950 down to 3.4 to 1 in 2000. By 2030, they project, there will be only two workers for each beneficiary.
The authors have constructed an intergenerational accounting equation by which they express - and we can understand - the economic pain we are inflicting on our children and our children's children. This equation, they claim, can be used to test all the currently popular proposals for 'easy fixes' as well as a "menu of pain" they themselves propose. As a formula the equation is A = C + D + V - T - H. or....
(A) The burden of debt on future generations =
(C) The present value of government purchases plus
(D) Official debt plus
(V) Implicit debt minus
(T) The present value of taxes paid by current generations minus
(H) The value of Government financial assets.
To change the future the authors present a "menu of pain" (created under the direction of the U.S. treasury secretary) by which the current generation can generate revenues and cut expenditures sufficiently to avoid the coming generational storm. The menu includes
* 69% increase in federal income taxes
* 95% increase in payroll taxes
* 106% reduction in federal purchases (admittedly infeasible)
* 45% reduction in Social Security and Medicare benefits
But all is not lost, the authors claim, and cite the United Kingdom as an example, explaining that policies adopted in the 1980s under Margaret Thatcher have put the UK in the best long-term fiscal shape of any major European Union nation. Finally, the authors propose actions that individuals can take now to protect ourselves and secure our future.
Rating:
Summary: A must-read
Review: You just read my brief review; but I can't understand why the blurbs from the back of the book (including 5 Nobel laureate economists) aren't posted at Amazon, so here they are, lifted from the MIT Web site:"There's a lot of frivolous criticism of our politicians, but this book hits the mark, convincingly documenting their biggest sin: the failure to account for the magnitude of a huge government deficit crisis. The accounting scandals of Enron, WorldCom, and Parmalat pale by comparison. Read this book so you can start preparing for much higher taxes in the future for you and your children."
--Robert J. Shiller, Yale University, author of Irrational Exuberance and The New Financial Order "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) "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) "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 "Between a rock and a hard place. We must all too soon realize that we want to spend more on transfers (Social Security, Medicare, Medicaid) than we are willing to pay in taxes. And the prospective $44 trillion shortfall is, almost literally, beyond ordinary comprehension. Documented diagnosis, along with suggested reforms, are first steps toward constructive dialogue."
--James M. Buchanan, Distinguished Professor Emeritus, George Mason University and Virginia Polytechnic Institute, Nobel Laureate in Economic Sciences (1986) "No economist has thought more clearly or spoken more resolutely about our long-term fiscal challenges than Larry Kotlikoff. In plain talk backed by economic rigor and the powerful models that he and his colleagues have pioneered, Kotlikoff and coauthor Scott Burns expose the shoddy thinking and false premises that lie at the heart of U.S. fiscal policy and that risk the economic well-being of future generations. They show how reckless George W. Bush has been with our economic future, but also show that the evasions from fiscal honesty extend well beyond the irresponsibility of this administration. And they offer solutions that are clear, bold, and controversial. You may not accept them in full, but you will understand better than ever before the real choices that we face. This book is a must-read for a country adrift in fiscal shortsightedness and political spin."
--Jeffrey D. Sachs, Director of the Earth Institute, Columbia University "Kotlikoff has been one of the pioneers of the new economics of generational accounting. If anyone foresaw the deterioration of the U.S. government's fiscal health, he did. Now, with journalist Scott Burns, he has written a book that spells out, in crystal-clear layman's terms, the disturbing truth about the rising tide of red ink."
--Niall Ferguson, Stern School of Business, New York University, and author of Empire and The Cash Nexus "The Coming Generational Storm is a well written summary of an impressive and important body of carefully documented research. The book demonstrates clearly the folly of existing tax and transfer policies in the face of the impending retirement of the baby boom generation. Anyone interested in the future economic viability of American society and the economic problems we are bequeathing to our children should read this study."
--James J. Heckman, The University of Chicago, Nobel Laureate in Economic Sciences (2000) "The Coming Generational Storm is one of the most important (and refreshingly irreverent) policy analyses of recent years. Laurence Kotlikoff and Scott Burns ask what will happen to our economy and way of life when the baby boomers meet the current Medicare and Social Security systems. Their answers, using the innovative techniques of 'generational accounting' developed by Kotlikoff and others, demonstrate how close we are to a genuine fiscal precipice and the hard landing that awaits us. For our current presidential aspirants, the authors also provide some provocative ideas for how to ameliorate the damage this storm will certainly leave in its wake."
--Robert J. Shapiro, Senior Fellow of the Brookings Institution and the Progressive Policy Institute, and former Under Secretary of Commerce for Economic Affairs "The Coming Generational Storm documents in frightening detail America's reckless fiscal trajectory as it barrels toward bankruptcy. The need to revamp Medicare and Social Security is urgent. This book is a must-read for anyone who cares about our nation's future."
--Janet Yellen, University of California, Berkeley, Member, Federal Reserve Board (1994-1997), and Chair, Council of Economic Advisers (1997-1999) "If Stephen King wrote about economics it would look like this. Kotlikoff and Burns have gazed into our future and seen a nightmare. The authors describe that nighmare vividly and identify why our elected officials on both sides of the political aisle are too cowardly to save us. Every U.S. citizen should read and digest this book before it is too late."
--Kevin A. Hassett, Director of Economic Policy Studies, American Enterprise Institute, and co-author of Dow 36,000
Rating:
Summary: Carolynn
Review: You know its time for Social Security Reform when you start yelling at your mother. I proposed means testing and raising the retirement age, she said, "That's not fair!"...and which point I found my self yelling, "I pay into Social Security and I'm not going to get any of it, thats not --explitive deleted-- fair!" I have long felt that I could live without recieving Social Security -- it was just going to be a fact of life. But then Congress went and passed the Medicare prescription drug benefits and I am now filled with rage. The book has lots of formulas and explanations that boil down to "young people today pay for old people today, there aren't going to be enough young people to pay for the old people of tomorrow." It then delves into excrutiating detail to what extent the government has tried to cover this up. What is really useful about this book is that at the end they give you practical advice about how to protect yourself. To my fellow 20 and 30 somethings...good luck. I'd say start voting, but it doesn't seem like anyone is willing to address this issue. I wrote all my senators and congressmen begging them to reform the Med. prescription bill...and all I got back was self congradulatory letters for passing the bill as it is! Grumble.
Rating:
Summary: Carolynn
Review: You know its time for Social Security Reform when you start yelling at your mother. I proposed means testing and raising the retirement age, she said, "That's not fair!"...and which point I found my self yelling, "I pay into Social Security and I'm not going to get any of it, thats not --explitive deleted-- fair!" I have long felt that I could live without recieving Social Security -- it was just going to be a fact of life. But then Congress went and passed the Medicare prescription drug benefits and I am now filled with rage. The book has lots of formulas and explanations that boil down to "young people today pay for old people today, there aren't going to be enough young people to pay for the old people of tomorrow." It then delves into excrutiating detail to what extent the government has tried to cover this up. What is really useful about this book is that at the end they give you practical advice about how to protect yourself. To my fellow 20 and 30 somethings...good luck. I'd say start voting, but it doesn't seem like anyone is willing to address this issue. I wrote all my senators and congressmen begging them to reform the Med. prescription bill...and all I got back was self congradulatory letters for passing the bill as it is! Grumble.
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