The Map and the Territory by Alan Greenspan — NINE | PRODUCTIVITY AND THE AGE OF ENTITLEMENTS

1. 1. Social Security and Medicare are perceived as earned entitlements rather than welfare, which makes them politically untouchable.
2. 2. The Social Security trust funds will run out by 2033 and Medicare by 2026 under current projections.
3. 3. Social benefit spending has crowded out gross domestic savings almost dollar-for-dollar since 1965.
4. 4. Republican administrations increased social benefit spending faster than Democratic ones, averaging 10.4% annual growth versus 8.1%.
5. 5. The decline in gross domestic savings has reduced productivity growth from 2.2% per year (1870-1970) to 2.0% (1965-2012).
6. 6. Taxation of upper-income households accounts for almost half of the decline in gross domestic savings since 1965.
7. 7. The U.S. has borrowed heavily from abroad to fund domestic investment, accumulating a net international debt of nearly $5 trillion by 2012.
8. 8. Without major entitlement reform, the U.S. faces a choice between wrenching benefit cuts or printing money, which would shake its financial power.