Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.
In the course of that year, the U.S. government’s fiscal gap -- the true measure of the nation’s indebtedness -- rose by $11 trillion. [...]
The U.S. fiscal gap, calculated (by us) using theCongressional Budget Office’s realistic long-term budget forecast -- the Alternative Fiscal Scenario -- is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference -- this year’s true federal deficit -- is 10 times larger than the official deficit and roughly as large as the entire stock of official debt in public hands.
The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.[...]
Part of the fiscal gap’s growth reflects changes in policy, such as the Bush and Obama tax cuts, the introduction of Medicare Part D, and the expansion of defense spending. Part reflects “natural” growth of existing programs, including growth in Medicare and Medicaid reimbursement rates. And part reflects the demographic time bomb U.S. politicians are blithely ignoring.According to the CBO:
When fully retired, 78 million baby boomers will collect, on average, more than 85 percent of per-capita gross domestic product ($40,000 in today’s dollars) in Social Security, Medicare and Medicaid benefits. Each passing year brings these outlays one year closer, which raises their present value.
Many budget analysts believe that the alternative fiscal scenario presents a more realistic picture of the nation's underlying fiscal policies than the extended-baseline scenario does. The explosive path of federal debt under the alternative fiscal scenario underscores the need for large and rapid policy changes to put the nation on a sustainable fiscal course.Hotair notes that, "We’ve been talking about the 'fiscal cliff' or 'Taxmageddon' coming at the end of the year, but this is the real fiscal cliff we face. And yet, no one in this general-election cycle has even acknowledged it, let alone proposed a solution to it."
Here is a more optimistic view of the situation.
Yeah, gimme my money, you damn kids!
ReplyDeleteThere's a problem with using these figures that show "if current trends continue, and things go along just as they are, we're facing the end of the world". The fact is, just as Public Employee Unions and General Motors non-Union employees are finding out, when the money runs out, they won't be paid.
Jeff, you won't be paying off my Social Security, at least not nearly to that extent. Social Security will either be reformed or collapse altogether before then. Same goes for these other things that blow the debt even more astronomically out of the water than it already is.
Brrrp. Gulp....ahem....I'm sorry. I just puked in my mouth.
ReplyDeleteVery crazy stuff. Certainly important. But the largest variable that you choose to ignore is me.
I will attack the accounting world in approximately 2 years and I will reform the world.
Bud-D, What do you think will happen when social security collapses, along with the government, and "people stop getting paid"?
ReplyDeleteYoung people today that are paying around 12% of their income into social secuirty will not be getting anything out of the system. Social security is an intergenerational transfer of wealth. When this realization sets in, people won't be happy. It is politically impossible to reform social security as acknowledged by politicans and our treasury secretary. It will collapse. I wonder if all of these old people that are dependent on it to provide their most basic necessities of life will just sit in the rocking chair and slowly fade away?
ToeJamm, Check out min 3:30 http://video.foxnews.com/v/1780170123001/ex-tarp-watchdog-we-hit-huge-resistance-from-day-1
Jeff, I'm not saying there won't be pain. There will. But it'll be the same pain that is now felt by PEU retirees whose pensions have disappeared, or the non-Union GM employees who had there's taken away by Obama, etc.
ReplyDeleteSocial Security has been an intergenerational transfer of wealth since it was 1st put in place. Where has the rebellion been against it? From what I can tell, the biggest supporters of the Prime Mover of this intergenerational wealth transfer is the age demographic that is/will be most hurt by it. By their voting preferences, YOUR age group supports my intergenerational scam of your money more than I do!
However, what can't keep going, won't keep going. Retirement will again be a tougher thing to do. More old people will live in poverty. However, we want to go back to a pre-New Deal society, where you saved/invested yourself and lived on that, and where, because of that responsibility, senior citizens were the poorest age-group in society. So, we will get that society. Where's the problem?
There will be problems. There will be extended recessions, hey, just like we're having now!, but we will muddle through. The end of the world always fails to happen.
The end of the world won't happen until the sun explodes in a couple billion years or a black hole comes along and destroys the Earth. But people's little slices, nations and ways of life, of the universe do come to an end. The world did end for the Romans when the Roman empire ended along with their way of life. The world did end for those Europeans during WW II that had their cities and families destoryed. I think that you don't realize the magnitude of the global economic situation. This is not the 1970's or the 1980's where isolated little economic problems occured. All of these economic recessions/problems are snow balling into a major global economic problem: the recessions or spikes on the graph are getting closer together and are getting more sever. The end of socialism/communism/the welfare state will happen in the coming decades. Politicans of the world will and are doing everthing in their power to prevent failed welfare programs and failed welfare nations from collapsing, and in the process will bring about by racking up massive debt and destorying currencies a major economic problem the world over that will impact the ability of people to provide for the most basic necessities of life. In the case of socical security, all of these old people that are soley dependent on it won't just be sitting around idly starving to death because they have no means to provide for themeselves. In the case of America and Europe when their currencies become worthless, there will be revolutions. History shows that when this happen major social upheaveals occur. The only reason that there is not major upheavals due to high unemployment in the developed world--around 15% here in America and over 20% is some European nations-- is because of the government saftey net. The governments are not going to be there indefinitly and the ability for the governments to provide for this safety net is not going to be their indefinity. This will not be like what we are having now. When this happens there will be some problems. Yes the human race will muddle must like it has all throughout human history.
ReplyDelete