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 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 Bush administration's spending and tax policies have charted a course straight into the coming generational storm.
Kotlikoff and Burns take us on a guided tour of our generational imbalance: 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 be solved by any of the popularly touted remedies: cutting taxes, technological progress, immigration, foreign investment, or the elimination of wasteful government spending. Kotlikoff and Burns propose bold new policies, including meaningful reforms of Social Security and Medicare, that are simple, straightforward, and geared to attract support from both political parties.
This paperback edition of The Coming Generational Storm has been revised and updated and includes a new foreword by the authors.
About the Authors
Laurence J. Kotlikoff, one of the nation's leading experts on fiscal policy, national saving, and personal finance and a columnist for Bloomberg, is Professor of Economics at Boston University. His writings and views appear in Forbes, the Economist, the Financial Times, the Wall Street Journal, the New York Times, and other leading media outlets.
Scott Burns’s personal finance column has been nationally syndicated since 1981.
"The Coming Generational Storm lays out the problems in understandable language and compelling detail."—The Washington Post
"...[A] serious attempt to look at a problem that most people are trying to ignore."—Alan Beattie, Financial Times
"...Filled with advice on protecting what you've got and making it grow before and during retirement."—Chris Tucker,Dallas Morning News
"...Kotlikoff proffer plenty of evidence to back up their claims."—Anne Wagner, National Journal
"The Coming Generational Storm ...lays out in easy-to-understand prose why Social Security and Medicare need a comprehensive overhaul."—Gregory D. Hess, Los Angeles Times
"Having painted a fiscal picture as awful as 'Guernica,' the authors unveil two bold plans....[An] engaging book." —Todd G. Buchholz, The Wall Street Journal
"The policy solutions of Kotlikoff and Burns are specific and ingenious...."—Michael Mandel, Business Week
"This is a book any serious investor should absorb and act upon."—Jonathan Chevreau, National Post
"This is a sobering look at an impending crisis with implications for all of us. Recommended for all collections."—Stacey Marien, Library Journal
"This may be the year's most important book. Essential."—R. M. Whaples, CHOICE
"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
A Forbes.com Top Ten Business Book for 2004