Global crisis, recovery, and the challenge of solvency
June 1, 2010
There are lessons to be learned from the sovereign debt issues that grew worse in recent weeks in Greece and other EU countries.
First, the investment environment is global and we all need to adapt.
And second, the United States must get its own fiscal house in order.
The Congressional Budget Office projected that our national debt will increase from about 63% of GDP today to more than 90% of GDP by 2020. That is a debt-to-economy ratio that the United States hasn’t seen since World War II. By 2020, we’ll be spending more than 25% of our total GDP while collecting revenue of less than 20%.
That is a path to insolvency, and the biggest drivers of this debt threat are our public entitlement programs, which include Medicare, Medicaid and Social Security.
With the Social Security Trust Funds facing a shortfall of over $5 trillion over the next 75 years, the time to fix the program is now. President Obama’s Deficit Commission should make a Social Security solvency plan its top priority.
Read more of Robert L. Reynolds’s remarks presented to the 21st Annual Conference on the Globalization of Investment Funds in Boston.
Global crisis, recovery, and the challenge of solvency
