America's Demographic Cliff: The Real Issue In The Coming, And All Future Presidential Elections

In four months the debate over America's Fiscal cliff will come to a crescendo, and if Goldman is correct (and in this case it likely is), it will probably be resolved in some sort of compromise, but not before the market swoons in a replica of the August 2011 pre- and post-debt ceiling fiasco: after all politicians only act when they (and their more influential, read richer, voters and lobbyists) see one or two 0's in their 401(k)s get chopped off. But while the Fiscal cliff is unlikely to be a key point of contention far past December, another cliff is only starting to be appreciated, let alone priced in: America's Demographic cliff, which in a decade or two will put Japan's ongoing demographic crunch to shame, and with barely 2 US workers for every retired person in 2035, we can see why both presidential candidates are doing their darnedest to skirt around the key issue that is at stake not only now, be every day hence.

Sadly, the market which due to central-planner meddling, has long lost its discounting capabilities, and is now merely a reactive mechanism, will ignore this biggest threat to the US financial system until it is far too late. After all it is the unsustainability of America's $100+ trillion in underfunded welfare liabilities that is the biggest danger to preserving the American way of life, and will be the sticking point in the presidential election in 80 days. However, don't expect either candidate to have a resolution to the demographic catastrophe into which America is headed for one simple reason. There is none.

The problem in a nutshell: the first wave of Baby Boomers, born between the years of 1946 and 1964, officially reached retirement age in 2011. There are a whole lot of Baby Boomers - just under 76 million, to be exact - that will depend on new money flowing into the system to help keep the entitlements coming. According to the latest Social Security and Medicare Board of Trustees 2012 Annual Reports Social Security now pays out more than it takes in, and is expected to do so for the next 75 years.

And while the market, and its "discounting" may now be largely irrelevant, those who care to be educated about the facts behind America's Demographic Cliff, here is ConvergEx and "Talkin' 'bout your generation"

According to the Census Bureau’s Current Population Survey, about 40.2 million people – 13% of the entire US population – are 65 years or older and eligible to receive government entitlements such as Medicare and Social Security. At current levels, spending on these entitlements make up about 8.7% of GDP – about $1.3 trillion. While this may sound sustainable over the short term, in coming years the amount of entitlement outlays necessary to keep up with retiring Baby Boomers is going to send spending through the roof. By 2030, for example, a full 19.3% of the population will be claiming SSI and Medicare benefits, based on the Census Bureau’s population projections (the CB uses an adjustment factor for the age cohorts based on mortality rates, foreign-born immigration, and life expectancy). For simplicity’s sake, here’s a decade-by-decade look at where the aging population – and expenditures – will be in the years to come, courtesy of the Census Bureau and the Congressional Budget Office (CBO):

•In 1900, 4.1% of the US population was 65+. By 1950, this number had almost doubled to 8.1%. As the chart following the text shows, the Baby Boomers (now ages 48-66) represent the most significant population wave in US history. According to the CBO, the population aged 65 and over will increase by 87% over the next 25 years as Baby Boomers enter retirement, compared to an increase of only 12% in those aged 20-64. •This year, 13% of the US population is 65+ and entitlement spending accounts for 8.7% of GDP. And that number only includes SSI and Medicare, not Medicaid and future Obamacare subsidies which add to these outlays. •In 10 years (2022): 16.1% of the population will be 65+, entitlement spending estimated at 9.6% ($1.5 trillion, based on 2011 US GDP) •2037 (25 years on): 20 % of the US population will be 65+, entitlement spending estimated at 12.2% of GDP ($2.0 trillion) •Not surprisingly, there will be far more women than men in the 65+ population. Women currently live about five years longer than their male peers, on average. Accordingly, the Census Bureau estimates that in 2030, there will be about 8 million more women than men that are 65 and older by 2030: 27.8 million versus 35.7 million.

much more at http://www.zerohedge.com/news/americas-demographic-cliff-real-issue-coming-and-all-future-presidential-elections

Baby boomers can’t expect retirement.
The good news is that I see this shitty market hiring 76 year olds over young upstarts.

Baby boomers are not the problem, we are the solution.
I feel awful for the young upstarts but their it is..

We funded our parents an grandparents retirement as well as our great grandparents.

It was crappy when We started out, and I expect young upstarts will do fine when I am in the ground.

My Father told me way back when “Nobody owes you a living”

The problem in a nutshell: the first wave of Baby Boomers, born between the years of 1946 and 1964, officially reached retirement age in 2011.

The problem in a nutshell is the Gubmint which is made up of 537 elected officeholders to the executive and legislative branch from both political party elites are LYING scum.

The population is INCREASING and the work foce is DECREASING yet the unemployment rate does not reflect that shift because the Gubmint be cooking the books by trickery such as adding 3.5 million to SSI disability in the Barry's socialist term of office.

The demographics of the babyboomers may be a problem, but the problem in a NUTSHELL is that the population is INCREASING while the workforce is DECREASING and that my friends is the CLASSIC definition of socialism.

We funded our parents an grandparents retirement as well as our great grandparents.

...and The Space Race, a half-dozen wars, the 'Great Society' and generations of the fattest, most pampered poor people on the planet.

But the chickens coming home to roost are the 50,000,000 Americans who aren't here, who never got a shot at anything, because they were removed from the economy before they were born.

Had abortion on demand not become a reality, the numbers would be different.

amen.
Also, need to include those millions not conceived due to ‘family planning’. The destruction of the family as the basic unit of the economy, with lessons of faith and hard work are very apparent.

We now have a gangster economy where anything goes as long as you don’t get caught. Well, we should not be surprised that the government also operates on the same rules. IMHO, the government will simply print the money to cover these entitlements, and the CPI will continue to be manipulated to
remove the cost of living increases. Eventually a monthly SS check will just about cover a happy meal.

Conservatives to a man agree that Social Security and Medicare are Ponzi schemes, dependent on ever increasing new enrollees to pay for benefits to people above them in the pyramid.

Leftists, and I regret to say that a few conservatives, offer the solution of increased immigration. If the original Ponzi had said, "the only thing wrong with my scheme is that I didn't get enough new suckers", we would be outraged.

Waves of new immigrants which have more than doubled the population of America in my lifetime not only will not cure our Ponzi dilemma, they will force us into choosing between liberty and protection from our neighbors who intrude ever closer in upon our space. But worse, far worse, the wave of immigrants who do not share our language, culture, respect for the rule of law, understanding of democracy, historical legacy, and commitment to capitalism will vote us into irretrievable socialist bondage.

This is really what the argument over Ryan's solution to Medicare is all about. He is trying to save the Republic not just from fiscal insanity but from the loss of our representative democracy itself.

The problem will be solved by future Democrat administrations. After 2016 we will have passed the demographic tipping point which will ensure Democrat majorities in federal elections. In addition to higher taxes funding of Medicare and Social security will be handled as follows:

1). Means testing. If you have assets from savings you will be denied benefits or receive reduced benefits. Feds will begin requiring you to report assets annually with your tax return.
2). Increase age to be eligible for benefits. Age 65 for “early retirement”’ age 70 for full retirement. It will not matter that jobs won’t exist or some will not be healthy enough to work.
3). Denial of life extending and quality of life improving medical care past age 75. The healthcare system policies will be designed to shorten the life span of “non productive” elderly citizens.. To paraphrase Obama, “you may get a pain pill instead of a hip replacement.”
4). Aggressive “end of life counseling” and widespread euthanasia. A society that aborts children will easily justify putting to death the sick elderly. Likely bureaucrats will have the authority to arbitrarily deny services to the critically I’ll, particularly if there is no family member advocate. No doubt these bureaucrats, assigned to every hospital, will have newspeak titles such as “Patients Rights Administrator”.
5). Confiscatory inheritance taxes. Over time the state will end the outdated practice of allowing people to designate where property goes after death by gradually increasing the death tax rate to 100%. Annual filing of asset statements with tax returns will facilitate this process.. At death property ownership will shift to the government to be used for the common good.
6). Value added tax or national sales tax. It will happen within the next 5 years, possibly implemented on a temporary basis at a very low rate (say 2%) to address the overall deficit. With 50% of the population not paying taxes it will be the only way to extract taxes from lower income people. You’ll never get Congress to reinstate income taxes on the “working poor” and despite the rhetoric they will never soak the rich. The only answer to raising tax revenues in a stagnant economy is broadening the tax base. A broadbase consumption tax is easy to implement. Plus it can gradually be raised as required.

The answer to the Medicare and Social Security funding crisis is to reduce the number of recipients. Obamacare is putting in the framework to reduce the life span of senior citizens. Means testing and extending the age of eligibility for benefits will be coming soon and supported by both political parties. The next time the Democrats have majorities in both houses of Congress, and the presidency, they’ll put in the rest of the taxes and take credit for solving the fiscal crisis.

I've long said that the whole concept of "retirement" is largely a fiction. There is no human society that has ever managed to survive a scenario where a large number of its citizens is completely unproductive for 20-30 years (or even longer) at the end of their lives, living a life of leisure while the rest of their fellow citizens slave away to support them.

On the one hand this is likely to collapse under its own weight. The interesting dynamic here, though, is that here in the U.S. we have entire industries built up around catering to retirees who have a steady, substantial source of income ... and these industries are going to fight hard to preserve the status quo even as the entire economy slides into the toilet.

RE :” The problem in a nutshell is the Gubmint which is made up of 537 elected officeholders to the executive and legislative branch from both political party elites are LYING scum.”

YEP, Democrats say there is NO problem(that raising taxes on the rich wont cure) .
But Republicans wanting the senior vote say that there wont be a problem for another 15 years so that the gubment is flush with money NOW to hand out to the retired now, just later in the future is the problem. Oh, and the two are NOT connected. Money handed to seniors now does not affect Medicare later.

RE :”The population is INCREASING and the work foce is DECREASING yet the unemployment rate does not reflect that shift because the Gubmint be cooking the books by trickery such as adding 3.5 million to SSI disability in the Barry's socialist term of office.”
”The demographics of the babyboomers may be a problem, but the problem in a NUTSHELL is that the population is INCREASING while the workforce is DECREASING and that my friends is the CLASSIC definition of socialism”

Democratic Socialism.
It means that those NOT working can outvote those who do. And the Republicans party will be going for some of those non-working folks votes with spending $$$$ trying to get away with playing both sides, as the Dems do.

After all it is the unsustainability of America's $100+ trillion in underfunded welfare liabilities that is the biggest danger to preserving the American way of life, and will be the sticking point in the presidential election in 80 days.

It's not clear in this poorly written article whether the writer is referring to actual welfare programs in that sentence, or if SS and Medicare are considered to be welfare programs.

But here we have another article bemoaning the SS and Medicare situation, while having little or nothing to say about the $1 trillion per year NOW BEING SPENT on the hodgepodge of welfare programs, the benefits of which are largely paid to working age Americans who don't work.

Based on recent articles stating that 100 million now receive benefits from various welfare programs, and 60 million are now on Medicaid (rising to 80 million if Obamacare if fully implemented), and 47 million receive food stamps (Swipe your EBT), it appears that around 20% of WORKING AGE ADULTS are now being supported by government welfare programs.

How does the future funding for all those welfare programs look? How much have the recipients paid into funding those programs?

There is the real problem that must be solved to put our fiscal house in order, and getting folks off welfare into jobs is the only solution. Again, these programs NOW cost a trillion per year, about 30% of the entire federal budget.

Conservatives to a man agree that Social Security and Medicare are Ponzi schemes, dependent on ever increasing new enrollees to pay for benefits to people above them in the pyramid. . . .

Social Security as initial created under FICA by Roosevelt was NOT a Ponzi scheme.

Social Security was voluntary.
The contribution was 1% of your income.
The card was not to be used for ID.
FICA contributions were kept separate from the General Fund.
Money received from Social Security was not to be taxed.

However

IIRC under Clinton, with Al Gore as the deciding vote Social Security became taxable.
Social Security became mandatory.
The contribution is up to over 7% of one's income up to ~$90,000.
Your Social Security Number is now your major form of ID.
Under Johnson contributions to Social Security started to mixed in with the General Fund.
Money received from Social Security is now taxable.
IIRC under Nixon, Disability Coverage (SSD, SSDI) was added to Social Security.

. . .Waves of new immigrants which have more than doubled the population of America in my lifetime not only will not cure our Ponzi dilemma, . . .

They most definitely will not. low wage immigrant households are subsidized by US tax payers by $20,000 NET per year per household the the tens of thousand of illegal cost NET hundreds of Billions per year.

It's not clear in this poorly written article whether the writer is referring to actual welfare programs in that sentence, or if SS and Medicare are considered to be welfare programs.

If we are going to be honest about 'social security', we'd have to admit that it is just another welfare program. I've been flamed on this forum before for making this simple, logical statement. It is apparently a truism that socialism is o.k. as long as you are the beneficiary of same. Here are the primary arguments used by alleged "conservatives" supporting welfare on FR and my answers:

It's My Money, how dare you talk about cutting SS after I've paid into it all these years!
Sorry, but it is not your money. The money paid out in SS each month is being confiscated from those currently working and paying the tax for it.
If they'll just give me the money (at interest) that I've put into it, we can call it even.
This is really related to item 1. The answer is essentially the same. HINT: There is no "account" with your name on it. The supreme court ruled on this very fact many years ago. Another hint: You have no property interest in any SS account in your name. You cannot will it to beneficiaries upon your death. This should be a major clue.
But I was promised that it would be there when I turned 65.
Politicians lie. Why any "seasoned citizen" should be surprised by this is a great mystery to me. They lie to get elected. They lie about what they've done. They lie about what they are going to do. They lie about just about anything you can imagine. Why would they not lie about this, especially since it helps keep them in office?
But what about the SS "trust fund"?
See above: Politicians lie. There was never a 'trust fund'. There was never supposed to be a 'trust fund'. Money that allegedly was deposited into this non-existant trust fund were immediately spent by the government to pay for all the other programs they lie to you about. It is an accounting gimick that anyone with a high-school education should be able to figure out. The interest (and principle) was "invested" in Non-marketable U.S. Treasury notes. Anyone who thinks about it for just a moment will understand that there is only one way to "cash" one of these notes, and that is for the government to tax those dwindling numbers of people who currently pay a net sum into government coffers. In other words, if one of these special notes is cashed, you've effectively increased the required level of taxation on the working class. Of course, the government, because it is full of lying, immoral scum, they could instead just create the money out of thin air via the Federal Reserve System. That, too, is a tax on the working class, though it is probably somewhat more fair because everyone will effectively have some of their wealth confiscated through the ensuing inflation.
More to be added
I'll this post as as skeleton to build a more detailed reply as time goes on, so I can just cut/paste until these threads.

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