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To: Zakeet

According to the GAO, the accrual deficit is $4.2T, far surpassing the $1.3T cash flow deficit. The accrual deficit would be substantially larger with more realistic assumptions in Obamacare. I am not even sure that an accrual deficit makes sense because the federal government has no savings mechanism. Additional revenues would be spent, not saved to prepare for future commitments. It is probably more meaningful to project future levels of government spending and borrowing. Both will substantially accelerate in the coming decades. At the very beginning of the baby boom generation, we have unthinkable deficits. I do not see any path to fiscal sanity as conservatives will never have strong control of government.

The consequences of unsustainable debt and spending are frightening. Contrary to conventional wisdom, this problem is not something that the younger generation will endure. It is a problem that every living generation will endure. The economic collapse will impact seniors the most because they have much less ability to manuever around the difficulties.


8 posted on 01/10/2012 1:03:03 PM PST by businessprofessor
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To: businessprofessor

Good insights. The entire system is not set up to reserve for future liabilities. Its set up to spend like Hell on transfer payments and to finance that spending by any means possible —taxes and, if taxes are politically unpalatable, borrowing. But then we hit a borrowing limit and the system goes into convulsions like a junkie who can’t get a fix anymore.

We also see models for the end-game and they aren’t pretty. Riots from the transfer payment recipients when they aren’t getting payments anymore. The entrenched entitlement beneficiaries, like seniors, will vote in higher taxes on the productive, in many cases taxes so high that it disincentivizes anyone from making money. The only solution that won’t be tried is cutting benefits and spending in any meanigful way. The productive will leave and we’ll end up with the national equivalent of a Detroit. A burnt out shell of what used to be, reverting to an 1800s economy or nature.


9 posted on 01/10/2012 1:16:06 PM PST by Opinionated Blowhard ("When the people find they can vote themselves money, that will herald the end of the republic.")
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To: businessprofessor

“this problem is not something that the younger generation will endure”

Well, when they jack taxes up so high on all of us, people are just going to quit and evade them however they can just so that they can eat.

And yes, it is coming when they keep raising taxes higher and higher.

There’s just not enough young folks to pull the cart.


12 posted on 01/10/2012 2:33:27 PM PST by BenKenobi
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