Boomergeddon, James A. Bacon, Oaklee Press (2010)

Other books have said the U.S. government is headed for bankruptcy.  See, e.g., The Coming Generational Storm, Kotlikoff and Burns, or The Coming Generational Storm, Peterson, both published in 2004. Typically, the core problem is seen as skyrocketing entitlement outlays for a rapidly growing number of senior citizens, corrupted politicians and lobbyists, and an electorate that has fallen asleep at the switch.

Boomergeddon argues convincingly that our country is in trouble, and having just been published the book is up to date.  It is also easy to read and seems reasonably balanced.  The chapter on the problems with the U.S. healthcare system – and why the recently enacted healthcare bill will probably not fix them despite including some good ideas – is particularly well done.

Bad as the projected deficits seem, they are almost surely understated.  Projected economic growth is too optimistic; interest rates will increase more than assumed; healthcare and other spending will run higher than projected. 

And the country will not wake up in time, says Bacon, so “Boomergeddon” (a catastrophic fiscal meltdown) will happen. “The special interest constituencies are too entrenched, the partisan politics too gridlocked, the public’s sense of entitlement too pervasive and the law of compounding interest too remorseless for the political system to right itself.” (p. 266) If so, look for a collapse long before his guesstimate of 2027.

Curiously, next to nothing is said about proponents of corrective action – other than Representative Paul Ryan (R-WI) and his “Roadmap for America’s Future.”  That’s not to take anything away from Ryan, who has shown real leadership, but others deserve mention as well, e.g., David Walker et al. who spearheaded the Fiscal Wakeup Tour over the period 2006-2008.

And there should definitely have been some consideration of the National Commission on Fiscal Responsibility and Reform (created by executive order in February 2010, 18 commissioners including Ryan and 11 other members of Congress), which is charged with recommending solutions to the fiscal problem (spending, entitlements, taxes, and budget procedures) in December 2010.  Maybe the Commission is just a ploy to propose tax increases, time will tell, but its existence should not have been ignored.

What would it take to avert Boomergeddon?  “To cut enough spending to ensure that surpluses and deficits balance over the course of a business cycle,” suggests Bacon (p. 267), “we need to carve at least $1 trillion out of a budget that is $3.5 trillion and growing.”  A lesser goal of reducing the deficit to 3% of GDP by 2014 is rejected (without mentioning that the president asked the Fiscal Commission to shoot for this).      

There is a chapter on actions that individual Americans can take to avoid being left high and dry when Boomergeddon happens and entitlement programs for seniors are sharply cut back.  Save for your retirement, work longer, live in a smaller house, spend less, etc.  Good advice, but most of us have heard it before.

Finally, there is a series of ideas for meeting the deficit reduction target or at least coming close. This chapter seems sketchy and unsatisfactory.  For example: (1) who says the FairTax could increase tax revenues by $350 billion a year without adverse effects on the U.S. economy, let alone that the 16th Amendment could be repealed (as advocates propose) to ensure against the imposition of a national sales tax and income taxes.  (2) Just how is it proposed to create “a tidal wave of creative destruction powered by entrepreneurs” in the healthcare sector?