The US faces the same issue as many aging nations today where entitlement promises become a ‘fiscal mountain’ over the next 19 years as the boomers move through. The top graph below shows how quickly costs will escalate and compound and especially once interest rates moderate away from the zero bound eventually over time. The growth rate in commitments is simply not something a smaller population of workers will be able to support.
But worse, as compared to other OECD nations, for the past 12 years the US has been collecting the lowest tax ratio from its populace. There are costs to maintaining a civil society, and for years now, US taxpayers have simply not been paying enough into their country’s coffers.
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Say Danielle; With the ‘problem’ of so-many aging boomers coming down the pike, whose numbers were known waaaaaaaaaaaaaaaaaaaaaaaaaaaaaay ahead of time, why didn’t our keepers uh, plan ahead? With so many actuaries knowing about the looming problem, why didn’t they FIX IT IN ADVANCE? Can’t we sue them for malpractice?
Jeez bleed the taxpayer some more. What about cutting the rotting fat from entitled, bloated, useless government bureaucracy. Increase taxes sure but where does it go? You have to balance the equation to make it work. Simply raising taxes and punishing the middle class some more is simply not going to work.
Big Government has to be very careful from here on. The masses are beginning to get very uneasy. Once you have set the agenda, programmed the model and turned on the power it is impossible to restrict the flow without producing heat. Things are simmering now. Taking away entitlements after generations of building them up will produce unexpected and signifigant distress and it is only a matter of when not if we reach 212 DF.
Have a great weekend Danielle.
Yesterday I went to but a new winter hat and was determined to buy made in Canada, and if I couldn’t find that then made in USA. I looked everywhere including online. Could not find one. I think that says a lot about the condition of the North American economy.
The masses are already beginning to rebel, as in ‘spontaneous moderation ala self-imposed spending cuts’…..look at some recent stock price drops……TFM, GCO, KSS, UA even YUM from Chinese moderation….people aren’t stupid, they know bad times are coming, and smartly they moderate…unfortunately in America its: Shop till you drop, or we all drop.
But luckily we can always count on the ladies to spend their way to beauty: ULTA up 7 bucks….sign of the times….they want to look good to keep their jobs and look greater to hook a guy and cut a grand bargain of their own.
How’s this working out for France, Italy, Germany, UK, Spain, Portugal, Ireland, Greece, etc. Does anyone really believe that there is any amount of money that government can’t burn through without anything to show for it? Especially with an economically illiterate know-nothing do-nothing marxist named Obama do his impression of a Third World dictator.
I live in the over populated, under educated USA, (still it is by FAR the greatest nation on the earth today) and I am ready to go over the cliff. I think it is the best medicine for us at this time. We must reduce spending, including military spending, and we must raise taxes. The fiscal cliff is the ONLY way our inept, immoral, rotten, criminal, slimy, snake-licking, butt-licking, good-for-nothing, useless, d–kless, spineless, sacks of stinky stuff political “leaders” will make even a start on the road to fiscal responsibility. Leaders? These rotten SOBs couldn’t find their own butts with 2 hands and a flashlight!!!
In chart terms, the rapid upswing is called hockeysticking.
In a recent trip to the local library, I came across a hardbound copy of ‘The Rise and Fall of the Third Reich’. The first chapters of how Adolf Hitler, a scrappy tramp in his youth read alot, since he was alone most of his life and the parallels of how he learned propaganda and using oratory leaves me the creepy feeling that is really kind of like Barack Obama. I’d like to be a fly on the wall in the secret meetings of the braintrust of the candidate, especially Axelrod. Nasty Chicago street gangsters.
Since government pork and waste is out of control, and since We The People will not rise up and put a stop to it, we probably do need to pay more in taxes if we are to have any hope of avoiding a currency collapse caused by printing dollars. (I think that a total world financial collapse is probably baked in the cake at this point, but we can keep trying, what else can we do?)
The problem is NOT a shrinking population. Due most likely to uncontrolled immigration America is becoming a 3rd world nation – our population growth thru 2050 will be 5th highest in the world. At no time will the workforce shrink:
http://www.huffingtonpost.com/howard-steven-friedman/population-growth-worldwide_b_1245202.html
You can see on page 3 of this article that the number of births now is about the same as at the peak of the baby boomer era:
http://www.bls.gov/opub/mlr/2006/11/art3full.pdf
So, contrary to popular opinion, it is not the fault of the baby boomers for the coming TOTAL collapse. Let’s think, what could be the problem here, why WILL millions of us die in the coming collapse? It couldn’t possibly be because:
1) Our population is out of control – nature doesn’t “thin the herd” does it? – anyway humans are exempt from natural cycles, right? Populations can grow without limit, right?
2) We voted for a welfare state for 40 years and now 1/2 of the population is dependent on government checks – nah, that could possibly be part of the problem could it? Nah, don’t blame the moochers……..they’re a minority (barely) and you might be accused of a hate crime if you blame the moochers……….
3) Our population and our government officials have no concept of personal responsibility and the need to not go up to their eyeballs in debt – nah, that couldn’t be it, right?
4) It couldn’t possibly have anything to do with the dumbing down of Americans could it? – you know the kind demonstrated on the “Jay Walking” segment of the Jay Leno show: http://www.youtube.com/watch?v=7_pw8duzGUg
5) What about things like corporate welfare, the rich get richer, the stock market is designed to bubble up, then the fat cats take the money and run, over and over and over…..that kind of thing…..could that be part of it? Nah, the rich wouldn’t intentionally take from the working class…….everyone knows that, right?
Nah, it must be the damned baby boomers……………….
ROFLMFAO!!!
Is there really a working class?
I know that it’s exciting and wonderful to visit Europe but even with their much higher tax rates do you really think that they have a more “civil” society than we in North America?
Believe it or not, belt tightening is good. Less is more, really.
Too much fluff in the world now, too much useless junk being produced, especially Christmas crap from China. I have to wait in my local town for those damn freight trains carrying endless boxcars full of cheaply-made holiday goodies to be stuffed into our stores by low-paid Americans and pawned off onto over-indebted Americans. For what? Christmas isn’t about crap, its about relationships. Eat starch, Mom?