Why I'm an economic pessimist.

[2centsworth]

This is a non-partisan post.

I'm going to list bullet points with links:

All of this is all from the General Accountancy Office of the United States. A non-partisan entity.


1. The present value of all the debt and financial obligations for the United States is now $45 TRILLION. Compare that to how much we own as an entire nation, $48 TRILLION(includes home equity).

Each one of us with a full-time job owes $365,000. http://www.gao.gov/cghome/rms052605/img8.html


2. This debt will grow because the government is afraid of older americans who represent 80% of the vote. Based on a study in Financial Planning Magazine the average person over 55 years old will receive $40,000 more from social security than what they put in. The average 30 year old will pay in $150,000 more than they take out.

Here's a breakdown of federal spending..

http://www.gao.gov/cghome/rms052605/img3.html




There's a lot more if you want to discuss, but it'll never be corrected because we are all too partisan- and for what reason? who knows, but within 30 years we're headed into the worst depression you could ever imagine.

[Mr. Peabody]

The solution is obvious.

Kill all of the old people!

[Guru of Nothing]

The solution is obvious.

Kill all of the old people!

Did you just say flu shot shortage?

I see a way out.

[2centsworth]

You guys prove my point. Of course, you have to think like me to prove it right?

[spurster]

Basically, the government has lost control over spending with the worst of both parties. They are both getting programs and tax cuts that increase the deficit, but neither are getting anything to decrease it.

It's not just old people the policitians have to pander to. We all think the taxes we pay is "our money". We all want our local bridges to nowhere.

[Extra Stout]

Yeah, the train is already off the tracks.

But hey, at least we see it coming! We'll all be little Joe Kennedys!

Chile's like California climactically, right?

[gtownspur]

Basically, the government has lost control over spending with the worst of both parties. They are both getting programs and tax cuts that increase the deficit, but neither are getting anything to decrease it.

It's not just old people the policitians have to pander to. We all think the taxes we pay is "our money". We all want our local bridges to nowhere.

The money we pay in taxes is our money. I do however agree that we should cut spending and pork. We should do away with bush's prescription plan and medical plan. If we privatize alot of goverment services we eliminate the extra spending to oversee those programs and we increase efficacy.

[2centsworth]

The money we pay in taxes is our money. I do however agree that we should cut spending and pork. We should do away with bush's prescription plan and medical plan. If we privatize alot of goverment services we eliminate the extra spending to oversee those programs and we increase efficacy.
It's hopeless. Just prepare yourself and your family.

[gtownspur]

It's not hopeless. I think if you searched around you'd find that we've been in deeper debt before. Barring any supernatural events we can still reduce that debt. THe statistic you cited about every american worker being in debt around 370,000 makes sense. You have mortgages, credit cards, and car payments that would make that number possible. What we need to do is create an ownership society. We need less government as possible. As long as we keep expanding our economy and gdp we're fine. We do need to get rid of social securtiy.

[2centsworth]

It's not hopeless. I think if you searched around you'd find that we've been in deeper debt before. Barring any supernatural events we can still reduce that debt. THe statistic you cited about every american worker being in debt around 370,000 makes sense. You have mortgages, credit cards, and car payments that would make that number possible. What we need to do is create an ownership society. We need less government as possible. As long as we keep expanding our economy and gdp we're fine. We do need to get rid of social securtiy.
Our Country owes 45 trillion, if every citizen puts everything they own in a pot including home equity we would come up with 48 trillion.

We do need an ownership society, and less government but we're not going to get it. Politically it makes sense to buy people off.

[RandomGuy]

It's hopeless. Just prepare yourself and your family.


I'm working on it as fast as possible. I just hope the economy holds out for about 10 years. That's all I need. 5 would be good, but 10 would be better.

[RandomGuy]

By the by, 2cents, try this website for a good bit you will probably like.

http://mwhodges.home.att.net/

It has a lot of happy fun graphs with good factual backing. The peak oil thing is really scary, but worth reading.

[Guru of Nothing]

There is the possibility of wide-scale world war, which could break everything down. And if "we" win, WELL, to the victors go the spoils - like hitting a great big ol' reset button.

You got to break a few eggs to make an omelet, no?

Invest in eggs.

[Nbadan]

I'm working on it as fast as possible. I just hope the economy holds out for about 10 years. That's all I need. 5 would be good, but 10 would be better.

Good luck. The housing market is already deflating in the coastal markets, the process may not ripple into Tx just yet as Hurricane victims suck up all the available cheap housing in the state, but I have little doubt that in the long-term, Tx will not be exempt from some home value deflation. A major catalyst to the Bush economy in the past.

[RandomGuy]

Good luck. The housing market is already deflating in the coastal markets, the process may not ripple into Tx just yet as Hurricane victims suck up all the available cheap housing in the state, but I have little doubt that in the long-term, Tx will not be exempt from some home value deflation. A major catalyst to the Bush economy in the past.

Heh, I ain't a home owner. I have borrowed heavily to finance my education tho'.

I am lucky in my choice of profession and that my earnings potential in the coming years will increase rapidly, and if I can get a job in the Austin/San Antonio corridor, that debt will disappear rapidly.

[SWC Bonfire]

The GDP in the third quarter alone was almost $12.6 TRILLION. More than enough to make a dent in the balance if they actually quit spending money like drunken sailors at port for the first time in 6 months.

[spurster]

The money we pay in taxes is our money. I do however agree that we should cut spending and pork. We should do away with bush's prescription plan and medical plan. If we privatize alot of goverment services we eliminate the extra spending to oversee those programs and we increase efficacy.
You should see that you are part of the problem. There is a large percentage of people that will very strongly resist higher taxes or giving up tax cuts for any reason. There is also a large percentage of people that will very strongly resist cutting/eliminating various programs for any reason. We have to be willing to compromise.

[DarkReign]

I for one, dont mind tax increases.

Everyone wants something for nothing. If taxes need to be raised, to get ahead of our debt, then so it shall be, IMO.

Do I WANT to? Nope. But I also understand. I dont want to pay the state $150 a year for my plate registartion either, but I have to. I dont want to pay taxes on the properties I own either (seeing as I am already paying the bank), but I have to.

Price of admission, I guess.

Raise em up, and knock it down. Oh yeah...

GO-GO-GADGET FLAT TAX!

[2centsworth]

I for one, dont mind tax increases.

Everyone wants something for nothing. If taxes need to be raised, to get ahead of our debt, then so it shall be, IMO.

Do I WANT to? Nope. But I also understand. I dont want to pay the state $150 a year for my plate registartion either, but I have to. I dont want to pay taxes on the properties I own either (seeing as I am already paying the bank), but I have to.

Price of admission, I guess.

Raise em up, and knock it down. Oh yeah...

GO-GO-GADGET FLAT TAX!
The problem is spending. According to the GAO in order to pay what we owe the government would have to increase taxes by 2.5 times. I already pay at least 50% of what I make in TAXES and Governement Fees.

[Marcus Bryant]

1. The present value of all the debt and financial obligations for the United States is now $45 TRILLION. Compare that to how much we own as an entire nation, $48 TRILLION(includes home equity).


Well, that does not include the PV of future earnings and taxes. You'd have to come up with a valuation of human capital and what not. Still, I agree with your general point. People do not seem to appreciate the reality of the entitlement programs going forward and what that means for payroll (as well as income) tax rates.

[Mr. Peabody]

The problem is spending. According to the GAO in order to pay what we owe the government would have to increase taxes by 2.5 times. I already pay at least 50% of what I make in TAXES and Governement Fees.

So you'd have to pay 125% of what you make in taxes and government fees.

I hope you have a lot of deductions.

[2centsworth]

Well, that does not include the PV of future earnings and taxes. You'd have to come up with a valuation of human capital and what not. Still, I agree with your general point. People do not seem to appreciate the reality of the entitlement programs going forward and what that means for payroll (as well as income) tax rates.
You're correct. Read the report I know you'll appreciate it.

[Nbadan]

Well, that does not include the PV of future earnings and taxes. You'd have to come up with a valuation of human capital and what not. Still, I agree with your general point. People do not seem to appreciate the reality of the entitlement programs going forward and what that means for payroll (as well as income) tax rates.

:rolleyes

So now Social Security is an 'entitlement' program? I'm sure the millions of older Americans will be surprised to hear this.

Clinton had higher tax-rates and a unprecendented economic growth period.

[Nbadan]

Heh, I ain't a home owner. I have borrowed heavily to finance my education tho'.

I am lucky in my choice of profession and that my earnings potential in the coming years will increase rapidly, and if I can get a job in the Austin/San Antonio corridor, that debt will disappear rapidly.

You don't have to be a home-owner to be affected by the tightening in the mortgage market and higher interest rates, because there are millions of home-owners who will be affected none-the-less. They won't be able to afford those luxury vehicles on credit, they won't be able to keep running up the value of their homes and cashing out the equity to pay off those high-interest credit cards. Like GM and Ford, American businesses will have no choice but to contract, and the downsizing will feed among itself.

[RandomGuy]

I for one, dont mind tax increases.

Everyone wants something for nothing. If taxes need to be raised, to get ahead of our debt, then so it shall be, IMO.

Do I WANT to? Nope. But I also understand. I dont want to pay the state $150 a year for my plate registartion either, but I have to. I dont want to pay taxes on the properties I own either (seeing as I am already paying the bank), but I have to.

Price of admission, I guess.

Raise em up, and knock it down. Oh yeah...

GO-GO-GADGET FLAT TAX!


We pretty much already have a flat tax. It wouldn't be the panacea that people think it would be.

[RandomGuy]

You're correct. Read the report I know you'll appreciate it.


It is an interesting report. "Current fiscal policy unsustainalbe".

I also like the interesting bit that in order to close the revenue gap to cover the deficits that we have been running it would require double-digit growth for 75 years.

This is a DIRECT rebuff to the Reaganomics crowd. Gotta love the GAO.

[RandomGuy]

You don't have to be a home-owner to be affected by the tightening in the mortgage market and higher interest rates, because there are millions of home-owners who will be affected none-the-less. They won't be able to afford those luxury vehicles on credit, they won't be able to keep running up the value of their homes and cashing out the equity to pay off those high-interest credit cards. Like GM and Ford, American businesses will have no choice but to contract, and the downsizing will feed among itself.

Exactly. I don't plan on owning a home anytime in the near future, but I do know that it WILL affect me on some level.

[2centsworth]

It is an interesting report. "Current fiscal policy unsustainalbe".

I also like the interesting bit that in order to close the revenue gap to cover the deficits that we have been running it would require double-digit growth for 75 years.

This is a DIRECT rebuff to the Reaganomics crowd. Gotta love the GAO.
Their you go, politicize it so we'll continue on the same path of arguing over nothing.

No matter you political persuasion the problem is SPENDING, not that we don't raise enough to spend, of the Economy isn't growing fast enough to spend. IT's as simple as we need to insist that all politicians CUT SPENDING. It'll never happen so that's why I'm a pessimist.

[RandomGuy]

Their you go, politicize it so we'll continue on the same path of arguing over nothing.

No matter you political persuasion the problem is SPENDING, not that we don't raise enough to spend, of the Economy isn't growing fast enough to spend. IT's as simple as we need to insist that all politicians CUT SPENDING. It'll never happen so that's why I'm a pessimist.

I wouldn't call it "arguing over nothing" to try and dispell the irrational belief in running massive deficit spending to rack up a massive overall debt with the insane belief that the economy will grow faster than it ever has for a sustained period of time to be able to pay back that debt.

I am not quite so cynical as to believe that the people in the middle whose opinions and votes matter the most can't be educated about sound fiscal policy. Cutting spending will have to happen, there is no other option. But as the current administration and congress demonstrate, a lack of vision is costly.

One can only hope that someone will step forward with something resembling a plan. It happens.