Simple Math Shows America Is Headed for an Economic Disaster

The Daily Reckoning ^ | March 30, 2016 | Jody Chudley

[george76]

Stan Druckenmiller ... when I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career.

The disaster that Druckenmiller sees coming for the United States is all about changing demographics and entitlement spending. They don’t add up to a sustainable situation.

In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.

Today, entitlement spending has swelled to nearly 70% of the annual federal budget.

Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.

...

Corporations are required to disclose on their balance sheet the future defined pension obligations that their employees have earned.

Those are very real liabilities for companies that are going to have to be paid, so they should be included.

The balance sheet of the United States, meanwhile, doesn’t account for the future payments that it has promised ... They should be recorded as liabilities of the United States.

[willibeaux]

light.....How the effects on the economy? Losing millions of baby carriages, cribs, diapers, etc purchases?

[rolling_stone]

they have been replaced 5 times over by illegals...

[Psalm 144]

We reverse the post-WWII course or face sovereign bankruptcy and dissolution.

Math is math. Neither Rome nor the Soviets were immune, despite massive military force, which in turn is expensive and must be paid for.

[Angels27]

The biggest expenditure of the federal government is fraudulent spending. Either paying fraudulent SSI, Medicare, Medicaid and welfare benefits, of the government spending fraudulent to grease big doners palms.

[Georgia Girl 2]

Well in 1940 we didn’t have millions of illegal aliens on the teat either. And the US Congress had not yet raided the SS fund and left an IOU.

[TexasTransplant]

Turn off the Money spigot.
Used to be the Printing Press, now it is a single Keybord and a single keystroke ... some Chimp taught to keep hitting a zero.

Laws are now suggestions for the Government, but not for You.
The Constitution is merely a whispered guideline that can mean anything you want it to mean.
Borders are just dotted lines on an old Map.

I quote “WE ARE SO SCREWED”

PS Old and Lame but... Bruce Jenner thinks my Dog is his Cat

[TexasTransplant]

**** “The Socialist solution is to raise taxes and kill the old, infirm and poor” ****

I AM SO SCREWED

[OftheOhio]

Talked with a 53 year old Ohio cop last week. He said he could retire now, but if he works another eight years and not a day after that he can pull down between a 400k to 500k pension. Unbelievable, Why would anyone work in industry.

[FreedomNotSafety]

No Representation WithouT Taxation

[cherry]

lets just face the truth...as bad as the SS pyramid is, with all its "disability" claims, the govt pension system is outright obscene in its "generosity"...

of course, govt workers...all of them...pretty much support electing anyone who will keep the obscenity rolling, and that includes military sadly...

[cornfedcowboy]

This can will be kicked down the road much much further than most can imagine. Virtually every industrialized country is in heavy debt. Just a guess, it will be 20 yrs before this thing falls apart. How bad can it be if the whole world goes broke together?

[publius911]

Simple Math Shows America Is Headed for an Economic Disaster

The First Moron has repeated over and over that he's familiar with simple math.

He has announced, on national television numerous times that 2+2 = 4.

[publius911]

Until an honest and complete discussion occurs on the meaning of "entitlement," I ignore this bullshit.

When all spending is included, it is meaningless.

Now, a discussion of all the existing forms of welfare would be a refreshing change...

We have a welfare disaster in the future.

[publius911]

I vote for falling generosity.

Nothing wrong with generosity.
So long as it remains an individual, voluntary, personal initiative.

[publius911]

The free sh*t army votes. We all know the answer.

Amen.
The only thing I would add...

The free sh*t army contributes nothing useful in any form to the country or the economy.

A fatal combination.

[sheana]

I’m with you on that but......I also think that everyone should be required to pay some taxes. That 45% number not paying any taxes is ridiculous and a lot of them actually get money back they never paid in. When they change that, which they won’t, I might think about generosity. Til then they can kiss it.

[kabar]

I vote for falling generosity.

Good luck on that one. We have 10,000 people retiring every day until 2030. We are an ageing society. Medicare and SS will consume more and more of the federal budget. 40% of all Medicare expenditures come from the General Fund.

In 1950 there were 16 workers for every retiree; today it is less than 3; and by 2030 there will be two workers for every retiree. Medicare has been running in the red since 2008 and SS since 2010. These are both pay as you go programs with today's workers paying for today's retirees.

I can imagine civil unrest if the politicians decided to cut entitlement benefits or such programs as Medicaid (80 million recipients) or food stamps (47 million). The Dems are promising free college, Medicare for all, and a $15 per hour minimum wage. Entitlements and other mandatories plus our debt servicing costs account for two thirds of the federal budget now. And those numbers will grow as our population ages. We are in deep sh*t.

[vette6387]

“Aborting 2 million future wage earners/taxpayers per year since 1973 has not helped. The beginning of the “aborted generations” would now be in their prime earning years.”

AsI understand it, the aborted have been heavily weighted toward minority and low-income segments of our society. So it may well be that your premise is inaccurate if the net result of abortions has been to reduce that portion of society that would be dependent and not productive.

[kabar]

Aborting 2 million future wage earners/taxpayers per year since 1973 has not helped.

The beginning of the “aborted generations” would now be in their prime earning years.

What do you think our population would be today without abortion? In 1970 we were a nation of 213 million. Today, it is 320 million and growing by about 3 million a year. We bring in 1.1 million legal permanent immigrants a year along with 640,000 guest workers annually. Since 1990 35 million legal permanent immigrants have entered this country. We have the lowest labor participation rates in 38 years. We have 94 million people between 16 to 65 who are not working. Many are in their prime working years.

Labor participation rates 1973-2016

Half of the abortions are to blacks. Instead of their current population of 45 million blacks, it would be closer to 90 million. What impact would that have on the economy?

[indthkr]

economics bump for later...