Stan Druckenmiller and George Soros made over $1 billion shorting the British pound. Now Druck is turning his sights to another mismanaged nation: the United States.
At a recent keynote address at USC, Druckenmiller sounded the alarm about ballooning entitlements.
Today, we spend 40% of our tax dollars on programs for seniors. By 2043, that will be 60%.
How do we pay for that? There are two main options: cut spending or raise taxes.
But the changes required would be huge.
Druckenmiller reckons we’d need to cut spending by 35% starting today and maintain that lower level forever. If we don’t want to do that, we could raise taxes 40% — permanently.
The last of the baby boomers retire soon. We’ve promised them benefits that will soon crowd out all other federal spending.
No defense, no education, no bridges, no nothing.
So how do we fix it?
Druckenmiller calls for big entitlement cuts. He supports ending payments to wealthier seniors and cutting cost of living adjustments (COLAs).
Means testing is a great place to start. People like me don’t need a government check.
And as painful as ending or reducing COLAs may be, it can happen anyway. State pensioners here in New Jersey haven’t had a COLA in 12 years, and the sky hasn’t fallen.
We must also raise eligibility ages. I see no problem with Social Security’s full benefit beginning at 75 (rather than 70) and Medicare at 70 (currently 65) for younger people like me.
I never expected to get a cent out of these programs anyway. Most young people don’t.
Reining in benefits is the one chance to salvage something for future retirees. If we don’t do something now, there will be nothing left for younger generations.
I’m confident that we’ll muddle through to a solution. It will probably involve some combination of benefit cuts and tax increases.
What do you think the future holds for entitlements and the US economy? Leave a comment and let us know!
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