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Is The ‘Fiscal Cliff’ Overshadowing The Real Economic Crisis?

“Fiscal cliff” negotiations reached yet another standoff Tuesday between President Obama and House Speaker John Boehner.

The president’s latest offer includes preserving tax cuts for Americans who earn less than $400,000. On Wednesday, Obama encouraged his “Republican friends” to “take the deal.”

The president then added, “But they keep on finding ways to say no, as opposed to finding ways to say yes. And I don’t know how much of that just has to do with it’s just very hard for them to just say yes to me.”

Down the Mall in Capitol Hill, Boehner practically sprinted to the microphone to assure the president that it’s not personal, it’s politics.

“And I hope the president will get serious soon,” Boehner said, “about providing and working with us on a balanced approach.”

The House will vote Tuesday on Boehner’s so-called “Plan B”, an offer that preserves tax cuts for all households with incomes below $1 million, instead of Obama’s cap of $400,000. The president could take that deal, Boehner said, or “he can be responsible for the largest tax increase in American history.”

If you’re getting fed up with the negotiations, so is Boston University economist Lawrence Kotlikoff.

He says the political theater surrounding the fiscal cliff is overshadowing what he believes is the true crisis: the massive funding gap for Social Security and Medicare. Kotlikoff called the entitlement programs a “Ponzi scheme.”

In response, Kotlikoff has put together The Purple Plans, a nonpartisan, economics-driven approach to entitlement reform. Five Nobel Prize winners have endorsed the plan.

Kotlikoff described his fix in detail to Radio Boston and why he believes the current fiscal cliff is a “manufactured crisis”.


  • Laurence Kotlikoff, professor of economics at Boston University and author of “The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy”


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  • http://www.facebook.com/anita.paul.5680 Anita Paul

    He is not a Rebuplican or a Democrat.  He is a corporatist.  Hello Mr. Flax Tax guy.

  • curtcpeterson

    Kotlikoff may be many things, but an expert on Social Security he is not. In fact, he doesn’t seem to have a grasp of even the basics of how it works. I suggest that he at least study its history and know how the system works before writing books and spreading misinformation.
    Social Security could not possibly be a system of collecting funds from people to be put aside for their retirement; it was begun in 1933 in the middle of the Depression – there was no money available. Workers pay the “payroll tax”, a misnomer for the Social Security Tax, to pay current beneficiaries. When they retire, people working at that time will fund the new retirees’ benefits by paying taxes on their income. By law, the tax is supposed to be collected at a rate that contemplates benefits to be paid.
    The surplus of $1 trillion can only be invested in US Treasuries, considered the safest investment in the world. There is a surplus and not a deficit in the system; Kotlikoff has no idea what he’s talking about.
    I think it is WBUR and other journalists’ responsibility to vet these commentators before letting them spread misinformation as if they knew their subject. Had WBUR done so in this case, Kotlikoff would never have been heard. He is an uninformed quack.

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