Mr. [Stanley] Druckenmiller is puzzled that so many financial commentators see the possible failure to raise the debt ceiling as more serious than the possibility that the government will accumulate too much debt. “I’m just flabbergasted that we’re getting all this commentary about catastrophic consequences, including from the chairman of the Federal Reserve, about this situation but none of these guys bothered to write letters or whatever about the real situation which is we’re piling up trillions of dollars of debt.”
He’s particularly puzzled that Mr. [Tim] Geithner and others keep arguing that spending shouldn’t be cut, and yet the White House has ruled out reform of future entitlement liabilities””the one spending category Mr. Druckenmiller says you can cut without any near-term impact on the economy.
One reason Mr. Druckenmiller says he spoke up in 1995 was his recognition that the first baby boomers would turn 65 in 2010, so taxpayers would soon have to start supporting a much larger population of retirees. “Well,” he says today, “the last time I checked, it’s 2011. We don’t have another 16 years this time. We’re there. I don’t know whether the markets give us three years or four years or five years, but we’re there. We’re not going to be having this conversation in 16 years. We’re either going to solve it or we’re going to find ourselves being Greece somewhere down the road.”
Can you say politics. Politicians get elected giving away copious amounts of other peoples money. You don’t get elected by cutting the freebies.
OK, they know about the Babyboomer bust so why did they cut the payroll taxes toward Social Security? That tiny bit of extra money in each paycheck doesn’t do much for the individual but, collectively, it’s a hit on the fast-declining SSA fund.