Skip to comments.The $44 trillion hole?
Posted on 05/30/2003 9:54:00 AM PDT by Recovering RepublicanEdited on 04/29/2004 2:02:36 AM PDT by Jim Robinson. [history]
NEW YORK (CNN/Money) - Many economists worry that the U.S. federal budget deficit could approach a record $500 billion this year.
Few, however, have grasped that the fiscal problems facing the United States could make an itty bitty $500 billion deficit look like pocket change.
(Excerpt) Read more at money.cnn.com ...
Does anybody believe that politicians are going to deal with this problem in a meaningful way? Or even within a meaningful time frame, since there is always an election coming up?
No one can predict the ultimate magnitude of these unfunded liabilities. But I am willing to predict that it is not politically or economically possible to fund these unfunded liabilities. Is anyone willing to project the financial, economical, and political consequences of not dealing with this problem?
I will make these two predictions: the dollar will depreciate until nobody in their right mind will want their wealth denominated in dollars. And two that the United States will be able to sell bonds, but at interest rates that taxpayers will not be willing to honor. When the United States does not have a viable currency and the full faith and credit of the United States are worthless, the United States will be bankrupt or the economic equivalent of Argentina.
How do you plan to ensure that you have a financially secure retirement? Are your children going to better off than you or your parents were? Do you believe that your children and grandchildren will sacrifice their own security and retirement to support yours?
Since the dollar started rallying back a couple days ago, you're already wrong from the get-go & you're obviously amongst those gloom & doomers so absurdly foolish it's not even worth taking the time to lead you through Econ 101 because, obviously, you FAILED!
Geez! I just had the same radical thought. Do you think I should do some sort of penance?
Shhhhh, you don't want to wake up the bots. Any hint of responsible political leadership or anything that might be thought of as the least critical of this administration will not be tolerated. Free speech and thought are so old fashioned these days.
coming from a true Puplava goldbug that is absolutely hilarious!
Oopsie! A basic error in their analysis - the liabiities are not "obligations" as the Supreme Court has already ruled and they may be arbitrarily changed or cancelled at the whim of Congress.
Over 75 or more years? If GDP is currently $10 trillion and doesn't grow, that's 44.2/750= 5.8% of GDP. Government currently spends about 30% of GDP. Sounds like cutting spending by 20% would fix us right up.
If GDP grew 2% a year we'd be talking about 44.2/1655= 2.7% of GDP, looks like a 10% spending cut fixes this problem.
Please, show me where I'm wrong.
Peasants can't overthrow the king when he defaults on promises.
Simply reforming and/or eliminating these stupid entitlement programs would be far more effective.
But this is not how government does things -- it always recommends the most expensive and draconian things first. A couple of years ago the Army Corps of Engineers was prepared to spend several billion dollars on a massive flood-control project to deal with recurring flooding in parts of the Passaic River basin in northern New Jersey. For about $500 million, they could have purchased every home in the affected area for about ten times its market value and relocated the families somewhere else.
As posted above, sell some land and you have 0 debt. I bet a couple of national parks have some minerals that would help and that if the Nature Conservancy can sell land to rich patrons we could sell some park land to Joe Six Pack and make a lot of problems go away. OH and we might sell some Federal Timber while we are at it, maybe at a low price so that the cost of housing goes down to 145,000 instead of 150,000 for the cost of the average new home.
We have a majority of the House and, probably, the Senate who would vote today to privatize Social Security and shift to a premium support, medical savings account approach on Medicare and Medicaid. And we have a president who would sign such a reform. The problem is the certainty of a filibuster, coupled with non-stop, froth-at-the-mouth howling by the dems right through the election.
The question is, will there ever be enough rational Senate Democrats willing to cross over and break a filibuster? I wouldn't bet on it, but there is a chance. Many of them have to know that this is not only the right way to go, but that they are young enough to still be around when the roof caves in. It's one thing for the fossils to play "after me, the deluge;" it's quite another for those in their 40's and 50's.
Perhaps more important, the intelligent dems also have to know we will eventually end up with an investment option in Social Security anyhow. Over two dozen other countries, including Britain and Sweden, are now doing it, and by delaying, we're conceding a massive comparative advantage to future competitors. The only real question is whether we do it pre- or post-bankruptcy. Obviously it's a lot less painful to do it now, but the 'rats would have to forego another three or four election cycles of howling at the moon on these issues.
Obviously the majority of the dems are perfectly willing to put the country through hell for short term political gain. The great historic question is whether anyone on their side any longer puts the national good first. Dems like Bob Kerry and Pat Moynihan talked the talk for years but never had the courage to act. Some Democrat has one of the great careers of this century waiting for him if he's willing to lead. It might even make him president.
Every increasing government spending is the economy. Big government is the employer and spender of last resort. It will eventually consume us all. Only solution is to cut off it's oxygen which is the treasury markets.
Perhaps I should explain myself at this point. While I may not totally agree with this administration, I cannot imagine myself voting for a Jimmy Carter or a Bill Clinton and certainly not for a Hillary Clinton. I am firmly rooted in conservatism and have been since becoming politically aware.
I believe that the Republican Party is currently the seat of conservatism in this country and has been for some time. In the unlikely event that this changes and the Democratic Party assumes that role, then I will have to reassess my thinking. I doubt very much that will happen though.
If you think that free speech is endangered by this Republican administration, just think of what would happen if Bill Clinton's woman were president. I think that even you would be frightened by this woman. I pray that the electorate of this country is smarter than that - but, who knows. Bill Clinton was elected twice, wasn't he?
You apparently thought that you had found an ally who would support your liberal philosophy. I hope you can understand that you were wrong and won't repeat this mistake again.
Actually, I am one of the most conservative of people. My problem (and increasingly so) is that we conservatives are voting for people who are less liberal than the alternative. When someone stands up and says they are for smaller less intrusive government and the protection of the constitution as written, or that they will not engage in nation building, then I expect that person to honor his word to those who voted for him. Government size and spending is expanding as fast as ever. We have homeland security and the patriot act and at the same time do nothing to protect our borders. We are "rebuilding" Iraq. I'm sure that you see the problem here for some conservatives.
The flap going on out there is about the Bush tax cuts, and how they're going to wreck everything, and I want you to watch and see how many people -- if any at all -- are alert enough to grasp what the real nut of this is. They are fretting their little nerves over $350 billion in tax cuts in the face of $44 trillion in projected deficits, and the matter of $36 trillion of that going to Medicare alone is somehow getting past them."Here
KS: Our calculation of a $44,000bn present value shortfall is actually very conservative. Our estimate of the Social Security liability is only around $7,000bn which is $3,000bn less than what it appears in the Trustees report. The reason why our Social Security number is smaller is that we calculate it under OMB assumptions, which are different than the assumptions used by the Trustees. Our Medicare number of over $36,000bn is calculated under very conservative health-care growth assumptions. Unfortunately, the Trustees' have not yet calculated that number for Medicare. But still it's very clear that almost all the problems are SS and Medicare. It's not the rest of the government that's a problem. This new framework would do wonders for analysing SS reform. The president's commission - which I had the honor to help work with during my time in DC - uses the older measures since the new ones were not yet available. If they use these new measures, plans like Commission Model #2 would look terrific.Present Value
The report, by Jagdeesh Gokhale and Kent Smetters, is highly technical and certainly has not been read, let alone understood, by most of the reporters who have used it as another pretext to bludgeon the Administration and to discredit tax cuts. The point of the report, titled "Fiscal and Generational Imbalances: New Budget Measures for New Budget Priorities," is to propose a new method of measuring the federal government's long-term budget obligations. The Administration did not include this paper or its findings in the 2004 budget report; instead, it included the 75-year projections for Medicare and Social Security which have been used by the federal government for a number of years. In other words, the current budget used exactly the same projections that have been used in past years, rather than adopting the new measure argued for by Gokhale and Smetters. Some scandal.Tax Cuts
And, yes I agree with you. Government continues to grow at an alarming rate and, as you said, the borders remain largely unprotected. Problem is, there is no political camp to which you can take your vote. For a conservative, that would be the Republican party. If you know of another party that's going anywhere in the foreseeable future, please let me know.
Why do you think that is? Could it be that as long as the political ruling class keeps an iron grip on the two party system and keeps the country polarized, they will always win and we will always lose?
Who are what is there to stop them?
Amazing that after the Kennedy and Reagan administrations that these so-called "economists" can't grasp that lowering rates mean more tax revenue. The private sector generates tax revenue. If you allow the private sector to have more activity, then more revenue will be raised. You raise economic activity by lowering tax rates. There's probably a peak rate where a tax rate will generate the most revenue through high economic activity. I'd imagine it'd be around 10%. Certainly less than 50%.