Archive for the ‘Entitlement Reform’ Category

Captain Rick: U.S. entitlement programs are going broke. Disability will be broke by 2016, followed by Medicare by 2024 and Social Security by 2035. These sobering projections were made by the U.S. Social Security Administration. This report presents an in-depth study of the U.S. Disability program.

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Disability recipients in jeopardy
Nearly 11 million people depend on federal disability payments.
Unless changes are made, beginning in 2016, the revenues coming in would not be sufficient to cover all of the disability payments.
Unless taxes are increased, disability benefits will have to be cut or the number of claimants reduced.

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Disability soared 27% since the beginning of the Great Recession
The number of people collecting federal disability has soared to nearly 11 million, up from 8.7 million in April 2007.
The federal government spent nearly $250 billion in 2011 paying more than 23 million Americans some type of disability claim. That’s about 7% of the overall population, and 16% of the workforce.

Causes for the Disability Program Increase
The Great Recession pushed many people into the disability program because it was a safety net to save them from economic disaster.
The aging of the baby boomer generation is one of the primary drivers. Workers typically enter the disability program in their 50s.
Disability claims among veterans are up 28% since 2008, according to the Department of Veterans Affairs.
With better surgical techniques and body armor, soldiers are ten times as likely to survive today’s wars, according to the Veterans Administration. But soldiers often come home with severe injuries. The recent decision to recognize post traumatic stress disorder as a disability has also lifted the number of benefits claims. The Veterans Administration noted that illnesses tied to the cancer-causing chemical defoliant Agent Orange used in Vietnam are also now viewed as a disability.  
More women have entered the workforce in recent decades, making them eligible for the program should they become disabled.

Americans are abusing the system because of the ease of entering the program. It’s morphed from a program that pays benefits to stroke victims and cancer patients to people with mental illness and chronic pain.

Prognosis for a Disability Program Solution
The disability program … the smallest of the three, will be the first that Congress has to deal with.
There is not much consensus about entitlement reform on Capitol Hill these days. Attempts to rein in Medicare spending have gone nowhere recently.

Disability Program Solution Possibilities

Solution 1
Congress could authorize increasing the amount of payroll tax supporting the disability program from its current 1.8%. An increase paid by workers and employers by 0.2% each would keep the program solvent for 75 years. But there’s little appetite among lawmakers to raise taxes these days.

Solution 2
Congress could authorize increasing the share of Social Security payroll tax going toward disability, instead of Social Security. Currently, the combined rate paid by employers and workers is 12.4%. The disability program’s rate is 1.8%, while the retirement system’s rate is 10.6%. Congress could authorize increasing the share going toward disability payments to 2.6% for two years and then slowly cut it back to 1.8% by 2030. This would keep the disability fund solvent until 2033, but it would shorten the retirement system’s predicted lifespan by two years, to 2033.

Solution 3
Congress could take the most controversial approach by raising the bar for eligibility for disability benefits.

Captain Rick’s Disability Solution Preference: I believe Solution 3 is the most intelligent solution … but considering how welfare-oriented the U.S. Congress is becoming, I do not hold much hope for this solution. I believe Congress will take the most cowardly path … Solution 2 … and rob money from Social Security to pay the rapidly expanding crowd who are abusing Disability. Do you agree/disagree? I welcome you to comment below.

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Entitlement Reform: https://atridim.wordpress.com/category/entitlement-reform/

Medicare: https://atridim.wordpress.com/category/medicare/

Social Security: https://atridim.wordpress.com/category/social-security/

Medicaid: https://atridim.wordpress.com/category/medicaid/

Tax Reform: https://atridim.wordpress.com/category/tax-reform/

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Captain Rick: Dr. Thomas C. Patterson, an Arizona critic of Obamacare Medicaid expansion, explains why this expansion is bad and encourages all to “look behind the curtain.” These are important words as the Arizona Legislature votes on this monument expansion of welfare spending. Arizona is one of about 30 states that have not yet hitched their ‘train car’ to the ‘Obamacare Medicaid Expansion Train’ that is headed down a track that ends a few miles ahead at the edge of the real ‘Fiscal Cliff.’

Dr. Thomas C. Patterson is a graduate of Yale University and the University of Nebraska. He was elected to the Arizona State Senate in 1989, serving as minority leader from 1991 to 1992 and majority leader from 1993 to 1996. Patterson was the author of legislation creating Arizona’s charter school system and welfare reform program. Until 1998, he was a practicing physician and president of Emergency Physicians, Inc.. Patterson also served as president of the Arizona chapter of the American College of Emergency Physicians. In 2000 he became chairman of the Goldwater Institute. Tom is a retired physician and resident of Paradise Valley, Arizona.

I asked Tom why he was contributing his words to Atridim News Journal. Tom replied “I write it because I don’t want to be part of the generation that let liberty die out on our watch or at least I want to know that I did what I could to prevent it. I would like some of the good things about America to be there for my grand-children.”

image Tom Patterson

The pressure from the Obama administration for Arizona to expand our Medicaid program is enormous. Gov. Brewer is on board and even some legislative conservatives seem to be wavering. But legislators should take one more look before they make what could be a fateful leap.

Here’s how it works. If we raise the eligibility requirements for Medicaid to 133 percent of Federal Poverty Level, the feds will drop additional subsidies of $1.3 billion annually into our state over the next three years.

Moreover, this raise can be accomplished with no general fund dollars. The state’s hospitals have agreed to pay additional taxes of $369 million to fund our share of the match. Gov. Brewer points out this is a phenomenal 10:1 “return on investment.”

When politicians use words like “investment” and “return”, your humbug detectors should start going off. If something seems too good to be true, it probably is.

First, the Obama administration pretty much struck out in their attempts to persuade states to establish insurance exchanges, so they’re frantic now to avoid a complete breakdown in the implementation of Obamacare. They’re pouring on the big bucks. But they’re spending borrowed dollars and that can’t last long.

For Arizona, taking on a financially unstable partner in a massive long-term venture wouldn’t be very smart. In fact, the feds are already considering extensive Medicaid cutbacks in their budget negotiations. The bigger point is that sharp reductions in the federal subsidy are a matter of when, not if. By 2020, even the promised subsidy ends. When that happens, Arizona will be left holding the bag.

That bag will be enormous. Of course, the rolls will be swollen by then with the eligibility expansion. But we will also be on the hook for the “woodwork effect”, the high number of patients who have been eligible for Medicaid but never signed up.

A 2010 Harvard study found that barely half of eligible Arizonans were signed up in AHCCCS (Arizona Health Care Cost Containment System), our Medicaid program. These are mostly younger, healthy people who don’t consume much medical care and don’t really need the insurance. If something happens, they can sign up any time.

But with the mandate under Obamacare to provide proof of coverage, the popularity of free insurance will skyrocket. In addition, employers with large numbers of low income workers may drop coverage or shift more workers to part time, making them Medicaid eligible under the new standards. Finally, people on SSI disability, a booming program, are automatically Medicaid eligible.

Medicaid costs have been ballooning 8 percent annually, compared to 1 to 2 percent economic growth. But apparently that’s not enough for the spenders. Total Medicaid spending under Obamacare is projected to grow from $400 billion to $900 billion by 2020. State budgets already stressed by high Medicaid spending will be in big trouble when they’re forced to pick up the tab.

The hospital tax is also deeply problematic. Hospitals are more than willing to go along, because it’s obviously in their best interests. But at heart, it is just a way to force paying patients to fund a welfare expansion that we can’t afford.

But there’s a bigger problem. The tax is unconstitutional unless approved by a two-thirds majority of the legislature. Proposition 108, a voter-passed amendment from 1992, states clearly that any net revenue increase to the state, including fees and special taxes, falls under its provisions.

The Brewer administration, recognizing it is unlikely that two-thirds of each house will sign off on their scheme, has tried to argue that the hospital tax is just a bureaucratically set fee and thus exempt. Whoops, there go the humbug sensors again. They’re not only almost certainly wrong, they’re playing with fire.

If they impose the bed text without legislative super-majority approval and it is later struck down, they would be in a world of hurt. They would lose their revenue and possibly their match and face gigantic Medicaid costs. Plus, there’s little meaning in prop 108’s super majority requirement if it doesn’t apply to this “fee”.

The more you look at this plan, the more serious problems keep bubbling up. Short-term, it has to be tempting to take the money. Ten years from now, the decision is going look a lot different.

Arizona legislators are under intense pressure to pass the Obamacare Medicaid expansion. They’re getting it from all sides.

“Do the math” the governor condescendingly demands, as if it takes special genius to figure out there is short-term gain in accepting these federal funds. “It’s your Christian duty” helpful ministers explain, apparently forgetting that Jesus preached personal compassion for the poor, not government lobbying.

Even the business community is on their case, claiming more Medicaid business will create jobs and stimulate the economy. Of course, if government spending really created net jobs, we would be awash in jobs because we have definitely tried massive spending in recent years.

The opponents of Medicaid expansion are commonly depicted as crazed ideologues blinkered by their opposition to Obamacare. After all, the creators of Obamacare were so frantic to get the states on board with the Medicaid piece that they agreed to provide near total funding initially for this nominally state-operated program. Even by 2012, they promise to provide 90 percent of the funds. Such a deal.

But Arizonans might be wise to look behind the curtain. As time rolls on, Obamacare is already defaulting on most of its key provisions.

For example, we were told that the average family would save $2500 annually on insurance premiums. It turns out the cost of health insurance will increase from $2100-$5000 yearly when Obamacare is fully implemented.

Obama himself promised that under his plan, “if you like your doctor, nothing will change”. Yet a recent poll from the consulting firm McKinsey estimated that over 40 million people will lose their employer-provided insurance. So much for that whopper.

The president also told us that no American families with incomes under $250,000 would see a tax hike. But there are over 20 new taxes in Obamacare. Many of them, like the tax on medical devices, a new tax on drugs, another tax on certain high-end health plans and reduced deductibility for medical expenses all fall squarely on the middle class.

There’s much more. We were told that Obamacare would cost “only” a trillion dollars over 10 years, that the costs would be partially offset by massive reductions in Medicare spending on the elderly, and that we would achieve virtually complete universal coverage. It’s all false, false, false. With a track record like that who could believe their next promise?

Gov. Brewer’s response is to create a “circuit-breaker”, a provision that calls for Arizona to revoke the benefits expansion if the federal funding falls below 80 percent. That sounds good and she is undoubtedly sincere. But she likely won’t be the governor when that day comes and whoever is will be under intense pressure to somehow maintain the program.

That’s the way the welfare state works, the “ratchet effect”. Whatever government provides, it’s never enough and the demands for more stuff never ceases. When benefits are granted, it’s nearly impossible to retract them.

So right here, in Arizona’s intense Medicaid debate, we see how Big Government rolls over and co-opts good people. It pulls the bait-and-switch, puts them in an untenable political position and forces them to support even this unpopular program that is certain to fail.

There is a growing recognition that Obamacare is an ugly hybrid, combining the worst aspects of government medicine and highly regulated private sector medical care. It was never intended by its advocates to be a permanent solution to America’s problems with affordability and access to care. Pres. Obama and others have candidly stated the real goal is a completely government controlled medical system.

That’s why it’s critical to stop Obamacare now and replace it rather than let it fail amid calls for a government takeover. We are going to end up either with medical care dictated by federal bureaucrats or one in which the power of free markets and patient choice prevail.

Real tort reform, price transparency, ability to buy insurance across state lines and many other possible reforms are out there, but we will never get them if the Obamacare train isn’t stopped.

Obamacare must have buy-in from the states to proceed. The stakes for the Legislature are enormous.

Captain Rick: After Tom’s commentary was posted, I asked Tom if my report served his words well. He replied “Everything is fine. Thanks for all your effort to alert Americans about erosions of our freedom. I am happy to be part of it”. Those words gave me great honor.

I welcome your comments, likes, shares and following of my blog! (If not visible, click the red title above)

Associated ATRIDIM NEWS JOURNAL Report Categories:

Medicaid: https://atridim.wordpress.com/category/medicaid/

Entitlement Reform: https://atridim.wordpress.com/category/entitlement-reform/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Fiscal Cliff Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Arizona Law: https://atridim.wordpress.com/category/arizona-law/

Arizona: https://atridim.wordpress.com/category/arizona/

Captain Rick: If the U.S. Federal Government was in control of your household budget, you would be in serious financial trouble!  I have prepared this simple comparison to show you why:

Annual Financial Statement of the United States of America:

U.S. Tax revenue: $ 2,170,000,000,000

Federal budget: $ 3,820,000,000,000

New debt: $ 1,650,000,000,000

National debt: $ 16,571,000,000,000

Interest on the National debt: $ 222,800,000,000

Recent budget cuts: $ 38,500,000,000

Let’s now remove 8 zeros and pretend it’s an annual household budget:

Annual family income: $ 21,700

Money the family spent: $ 38,200

New debt on the credit card: $ 16,500

Outstanding balance on the credit card: $ 165,710

Interest on the credit card: $ 2,228

Total budget cuts so far: $ 385

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What would happen if the bank froze your credit card, preventing more debt?

Can you imagine how bad your budget would be if you were spending $16,500 more each year than you received in income? The interest on your credit card balance would be $2,228 this year and would be added to your massive balance of $165,710. Each year your debt is growing larger at a rapid rate.

Now, suppose your bank lost faith in your ability to pay your balance. Its easy to guess that your bank will freeze your credit card, allowing no further debt. How will you pay the $16,500 in expenditures that were beyond your budget?  How will you make your loan payments, or even pay the $2,228 in interest on your credit balance? You would probably be left with one choice…declare bankruptcy. Luckily, you would have the U.S. Federal Government (Uncle Sam) to excuse your debt and allow you a new financial start.

What would happen if the bank froze Uncle Sam’s credit card, preventing more debt?

The situation with Uncle Sam’s budget is identical to yours, only exponentially larger. However, there is a large difference in who controls the credit. Uncle Sam’s debt is not held by a bank. It is held by a large number of investors, investing firms and countries all around the world. Japan and China hold a large portion of America’s debt. It is highly unlikely that all of the creditors would freeze Uncle Sam’s credit all at once. But, supposing one day China or Japan lost faith in Uncle Sam’s ability to repay their investment…or even the interest on it? Its easy to guess that they would stop further investments in the U.S. federal government.

When a large enough source of new investment is stopped, how will Uncle Sam finance America’s programs which count on $1.65 trillion of borrowed money each year? How will it repay its debt to investors…or even pay the $223 billion in interest on the balance? Unfortunately bankruptcy is not an alternative for Uncle Sam. There is no bigger entity to bail it out or give it a fresh financial start. Its only remaining option will be to reduce payments to various programs so that it stays within the limits of new debt which can be sourced. It could also mean that the U.S. would have to default on its debt owed. This in return would most certainly stop most, if not all of America’s creditors from making further investments. This would worsen the situation and virtually force America to live within its budget, drastically slashing its programs by $1.65 trillion per year. Programs like Social Security, Medicare, Medicaid and Defense would most certainly be significantly affected, as they are the largest budget items. Such massive cuts would most certainly cast America into a deep recession, probably far worse than the Great Recession a few years ago.

Captain Rick’s Solution Scenarios

Maintain Current Course of Deficit Spending with only small, token reductions:

This is not an acceptable solution. It will lead to failure of America’s financial system within a few years. The cost of America’s entitlement programs like Social Security, Medicare and Medicaid are growing in size at an astronomical rate. In a very short time these three programs will consume 100% of all Federal Tax Income, leaving nothing to support the entire balance of the government without deficit spending. With this course, its not a matter of IF the world’s creditors will cut off America’s credit…but WHEN.

Balance the U.S. budget within 10 years:

This is the course America must take if it is to survive. The Fiscal Cliff had a goal of cutting half of the deficit spending 10 years. That was a good start, but congress cant even achieve it. Congress continues kicking America’s debt can down the road, agreeing on allowing only token spending reductions and tax increases. America must do better…soon!

It will require major spending reductions affecting all programs and tax revenue increases across the board. It will also require significant entitlement and grant program reform. The days of Uncle Sam handing out money with a blindfold on must end soon.

Does America have the ‘guts’ to make these sacrifices? Time will tell…but time is running out quickly. I hope for our children’s sake that America gets its act together soon or our kids will likely find themselves living one day in a third world country.

I welcome your comment and hope you will share this with your friends via one of the means I have provided. Together, our voice can make a difference.

More Info:

Fiscal Cliff: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

U.S. Debt Crisis: https://atridim.wordpress.com/category/u-s-debt-crisis/

Captain Rick: Here we go again. Treasury Secretary Tim Geithner warned Congress in a letter that U.S. borrowing will hit the debt ceiling on Monday, and that Treasury will begin using ‘extraordinary measures’ to prevent government spending from exceeding the legal limit of $16.394 trillion. On Monday, debt subject to the limit was just $95 billion below the $16.394 trillion debt ceiling. That allows for spending over $13 billion a day through next Monday. It makes my head spin thinking about how fast the U.S. spends money and that over $1 trillion of what it spends each year is borrowed money (deficit spending) that adds to the U.S. National Debt.

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The extraordinary measures include suspending the reinvestment of federal workers’ retirement account contributions in short-term government bonds. All told, the extraordinary measures can create about $200 billion of headroom under the limit — normally about two months worth of borrowing.

If America begins going over the ‘Fiscal Cliff’ on Tuesday, January 1, as all indications point to now, $600 billion in annual spending cuts and tax revenue increases will kick in and slow the generation of debt to half speed. This would double the period of time to 4 months remaining before extraordinary measures would be exhausted.

After the extraordinary measures run out, Treasury won’t be able to pay all the country’s bills in full and on time. At that point, the United States will run the very real risk that it could default on some of its obligations, such as making interest payments on America’s National Debt which total a staggering $260 billion per year. This would have a severe negative impact on America’s credit rating which would have a ripple effect of making it more costly for the U.S. Treasury to borrow money. At some point foreign governments, like Japan and China, which hold large sums of American debt, would slow lending or even curtail it. The American economy would grind to a halt and be thrust into a deep recession, dragging all world economies along with it.

Other solutions could be to default on Social Security, Medicare, Medicaid and other government program payments. We all can comprehend the immediate, massive, destructive effect that would have on society.

Thus, we can conclude that default of any kind  is not an acceptable solution. The only immediate solution will be to increase the national debt again. Those who have studied Captain Rick’s FISCAL CLIFF Course 101, know that its just a matter of time before raising the national debt ceiling will no longer be a workable option. This is why it is so important that the ‘Fiscal Cliff’ spending cuts and tax revenue increases take effect on January 1.

Captain Rick’s Dream for America

I find the manner in which the President and Republicans and Democrats in Congress are trading off fiscal ‘trinkets’, in an effort to fool America that they can come up with a better solution than the ‘Fiscal Cliff’ to solve America’s serious problem of thirst for debt … almost laughable.

The President and Congress should stop playing fiscal games. The current members of Congress should stay home on vacation for the rest of the year. A new slate of legislators will be sworn in on January 3, hopefully with a work ethic that is void of politics (I am holding my breath), and work towards raising the debt ceiling along with the creation of Fiscal Cliff 2 … another painful round of spending cuts and tax revenue increases that would finally balance America’s budget and eliminate deficit spending. Ideally, it would start on January 1, 2014, when the next raise of the national debt ceiling will most likely be required. Hopefully that would be the last need to raise the America’s National Debt Ceiling.

Perhaps Fiscal Cliff 3 could kick in on January 1, 2015 with another round of spending cuts and tax increases that would begin reducing America’s National Debt and its interest on the debt which will be well over $300 billion per year by then.

If America were to follow this painful fiscal road, our children and grandchildren could have a realistic chance to make a descent living and recapture some of the Great American Dream that kids growing up in America back in the 1950’s and 1960’s once had. I was one of them. They were great times that are ‘long gone’, but can be rekindled if we, the generations who helped create America’s fiscal ‘nightmare’, accept some sacrifices. I urge everyone in America to accept the ‘Fiscal Cliff’ with a ‘grain of salt’ as it becomes effective on January 1, 2013 and urge your legislative representatives to work towards achieving Fiscal Cliff 2.

View Captain Rick’s entire FISCAL CLIFF Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Captain Rick: 2012 is drawing to a close with no congressional deal in sight, which means the ‘Fiscal Cliff’ will happen automatically, by law, on January 1, 2013. The ‘Fiscal Cliff’ is a combination of the expiration of temporary tax cuts and spending extensions and other spending cuts from laws passed previously. In total, it reduces half of Americas deficit ($600 billion per year…approximately $7 trillion over the next 10 years). Previous laws allowed America’s staggering national debt to be raised to keep the U.S Government running in exchange for the ‘Fiscal Cliff’ if the congressional appointed ‘super committee’ did not produce a better solution. No agreeable alternative solution was found, as appears likely with current negotiations…so America will most likely witness the ‘Fiscal Cliff’, by law, on January 1, 2013.

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‘Fiscal Cliff’ Solution Scenarios:

Scenario of Congress agreeing to stop, postpone or ‘water down’ (lower) the ‘Fiscal Cliff’

Captain Rick’s chances of this happening: Near 0%

Captain Rick’s rating for such action: “F” (FLUNK)

Captain Rick’s prognosis: While this is what is being portrayed by the news media as the best solution, it is mathematically impossible and fiscally irresponsible…because America’s National Debt Clock continues to tick. Its just a short time before America will need to raise the debt ceiling again, because it spends $1.2 trillion more per year than it receives in revenue. That will foster ‘Fiscal Cliff 2’…perhaps twice as high as ‘Fiscal Cliff 1’. Keep in mind that even if America were to balance its budget (a far off dream), it would be left with its staggering debt of $16.2 trillion and its annual interest of $258 billion, the 5th largest U.S. expenditure of tax revenue. This money is paid to America’s debt holders…the largest being Japan and China.

Scenario of America going over the ‘Fiscal Cliff’

Captain Rick’s chances of this happening: Near 100%

Captain Rick’s rating for such action: “B” (Best possible current solution, but America can and must do much better in the future)

Captain Rick’s prognosis: As horrible as the news media has made the ‘Fiscal Cliff’ sound, it is Americas best hope to get ‘back on track’ to prosperity. Yes, it might mean a small drop in GDP and small rise in unemployment…but that is far better than a large drop in GDP and large increase in unemployment and possible recession or even depression a few years from now if America does not confront its extremely serious debt problem ‘head on’ NOW.

Captain Rick’s hope for the future of America

Once we go over the ‘Fiscal Cliff’ and begin to realize the shock of it all, our Congress needs to ‘come to bat’ for America and produce constructive legislation to fix a few urgent, very serious problems like the Medicare ‘Doc Fix’. Historically congress provides for a periodic ‘cost of living’ adjustment for reimbursement to Medicare doctors. This years adjustment has been stopped by the ‘Fiscal Cliff’. If this is not fixed, eventually many doctors might stop seeing Medicare patients, leaving them without a doctor. Congress will also need to begin serious reform to its entitlement programs…Medicare, Medicaid, Social Security and federal pensions, which have expenditures growing at astronomical speed in comparison to tax revenue. The U.S. fiscal problem is monumental and deserves our immediate attention now, in an effort to ward off significant fiscal failure of the U.S. with a ripple effect to the entire world in years to come.

View Captain Rick’s entire FISCAL CLIFF Course 101: https://atridim.wordpress.com/category/fiscal-cliff-course-101/

Captain Rick:  Click and Play the video below to get an excellent 3 minute summation of the world’s 5 Global Risks, each of which can completely change the global outlook. There are two in Europe, one in the Far East, one in the Middle East and one in the U.S. … the pending Fiscal Cliff … potentially the biggest global risk of them all. 3 Fiscal Cliff scenarios are discussed of which one is following the current course of doing nothing. This would cause a 4% contraction in GDP and cast the U.S. into Recession. For the first time in a very long time our kid’s generation would be worse off than ours. Two other scenarios are discussed that offer hope. The conversation includes a statement that a fix must include compromise of tax increases and entitlement cuts. Mathematically, the problem can’t be fixed by addressing one side only.  We are fortunate that we have a currency that everybody still wants, so we still have some time to get it right by enacting proper tax and entitlement reform. We just need politicians that are willing to compromise, which could be the most difficult job of all.

FORTUNE Video by PIMCO CEO: http://money.cnn.com/video/magazines/fortune/2012/10/04/f-el-erian-pimco-ceo-global-risks.fortune/