Tuesday, November 23, 2010

Author Interview: Jim Bacon Predicts Economic 'Boomergeddon'

On August 20, Richmond-based Oaklea Press released a new book called Boomergeddon: How Runaway Deficits and the Age Wave Will Bankrupt the Federal Government and Devastate Retirement for Baby Boomers Unless We Act Now, written by James A. Bacon, Jr., founder of the on-line political newsletter, Bacon’s Rebellion.

That mouthful of a title was the topic of a conversation between Bacon and me in early August in Richmond, at a meeting of political activists and policy experts sponsored by the advocacy group Tertium Quids.

'Deep Doo-Doo'
“Boomergeddon basically makes the argument that we’re in very deep doo-doo,” said Bacon.

“The federal government,” he explained, “is going into default within the next 15 or 20 years.”

This will “precipitate an unbelievable series of events,” said Bacon, starting with “a massive Keynesian contraction which will probably push the country into a steep recession, if not a depression.”

The federal credit crunch will also “lead to the collapse of the American empire,” and hinder the ability of the United States “to project force overseas” with “complications and ramifications” that will particularly affect world trade.

Finally, Bacon said, “it will lead to a total shredding of the social safety net. Medicare, Social Security, and Medicaid will be decimated.”

Baby Boomer Retirement
The book is “addressed to baby boomers,” added Bacon, those who will be retiring through the next 15 years and who “haven’t saved enough money for our retirement.” Boomers will not “come close to being able to replicate our lifestyles that we’ve enjoyed until now.”

The problem is, Bacon noted, that “if we’re counting on Social Security and Medicare and Medicaid and all those things to back us up [and] to create a nice retirement then we’re all be very disappointed. It’s going to be really, really, really ugly.”

The causes of this coming crisis include health-care costs, which, Bacon points out, even President Obama recognizes as “the biggest driver of all, driving the cost of Medicare and Medicaid.”

Bacon said that in his book he “dissects” how the president tried to address this looming issue through Obamacare, but he concludes that the new health care plan “is not going to bend the cost curve downwards.”

National Debt Bomb
A second cause is the national debt, which “will continue to mount, even by Obama’s calculations, up to $20 trillion within the next ten years.” This will cause a global capital shortage and higher interest rates passing 10 percent.

When interest rates go get that high, Bacon said, “the only way you can cut back is to default, and that’s going to precipitate what I call Boomergeddon.”

There are what Bacon calls “theoretical solutions” that could prevent the crisis he foresees.

Strategy to Prevent Boomergeddon
He lays out a strategy in the book to “bring the budget back into balance by cutting about $800 billion in annual expenditures through a combination of things like a fair tax, cutting defense spending, cutting discretionary spending, and cutting corporate welfare and a variety of other means.”

He doubts that Congress and the Executive will be able to do that, however, “given the hyperpolarization we have in the capital and the blindness to what’s happening.”

(A slightly different version of this article appeared on Examiner.com on August 19, 2010.)

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