Thursday, October 9, 2008

Only the First of Many Future Bailouts

PRNewswire-USNewswire/ -- For those who think the U.S. Treasury's bailout of the banking industry is bad, here's some news for you -- this mortgage bailout is only the first, and the smallest, of a series of bailouts that are going to be necessary in the future, warns the Institute for Policy Innovation (IPI). And taxpayers who have made responsible financial decisions are going to be on the hook for those as well.

Americans are rightly concerned not only about the cost of the bailout, but of the precedent of letting actors in the market make enormous profits while having the risk backstopped by taxpayers. And taxpayers are disturbed by the fact that elected officials were repeatedly warned about these risks and problems, but did nothing.

The bailout will affect regulatory policy, tax policy and the funds available for any number of other programs, to say nothing of affecting our ability to deal with any future crisis that might arise.

Medicare and Social Security are both going broke, and everyone knows it. The combined unfunded obligations of Medicare Part A and Social Security are in the neighborhood of $48 trillion -- 48 trillion dollars that the federal government has promised to retirees but has no way to pay -- and knows it has no way to pay.

But it's worse than that -- taking into account the three major components of Medicare, its unfunded liability alone is $85 trillion. Combined with Social Security, that results in about $100 trillion in promises the federal government has made that it has no plan to fulfill.

Medicare went into deficit this year -- 2008. That means that this year Medicare began paying out more than the program takes in. And Social Security will go into deficit in 2017 -- less than nine years from now.

As far as bailouts go, you ain't seen nuthin' yet.

It's time for voters and taxpayers to start holding elected officials accountable for heeding the warnings they are given and solving problems BEFORE gigantic taxpayer bailouts are required. Any fool can go to Washington, collect campaign contributions and stand in front of the TV cameras. But we can't afford that luxury anymore.

Voters must hold the next Congress and the next President accountable to take action to prevent the need for a massive taxpayer bailout of Social Security and Medicare. That's the bad news. The good news is that, in the weeks before an election, we all get to choose who makes those decisions.

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