(Obama) USA Administration policy regarding trade, with uncertainty of high taxation and over-regulation of business;
growth in number of government employees;
lack of immigration enforcement for illegal aliens and providing them benefits;
etc., etc., etc.,
all cause this problem
If one looks at the “Zombie” state of certain economies like that of Japan, and the oncoming situation in southern Europe, it isn’t too hard to draw certain conclusions from it, even if we had no theoretical basis (which we do) to do so.
Ageing populations tend to burden working people. It may be noted that the share of national income going to “work” decreases in indirect proportion as transfer payments to those who do not work goes up. So, work is worth less and less, and the wealth gained from income is more and more difficult to obtain.
Excessive debt crowds out other alternatives and, indeed, encourages incurring yet more debt while simultaneously destroying jobs that could be used to decrease debt.
The U.S. debt level has increased dramatically under both the previous administration and this one, but even more dramatically under this one. In the first case, war had a lot to do with it. In the second, paying off political contributors and supporters is almost entirely the cause of it. (This country would actually better off if this administration simply stole campaign money from the treasury rather than spending trillions to gain millions.)
Possibly the U.S. alone among developed nations really has the ability to pull itself out. Our population, while ageing, is not nearly as old as that of the others. Our current debt level is not as high. Our economy is potentially more dynamic. We can still attract immigrants to offset our inadequate birth rate.
This country could again bestride the world as the economic colossus. But the political will to emerge on top of the global financial crisis just isn’t there. It isn’t there because the current administration is busy convincing people that it can somehow impart prosperity by seizing the property of others or simply borrowing more, instead of curbing its own appetite for slush funds with which to buy votes.
And so, while prudent Americans (and many businesses) are desperately trying to reduce their debt levels, the government is busily increasing it. More than that, it is laying the groundwork in the form of class envy, to do even more of it. “Obamatax” is just a fig leaf over the desire to borrow more and spend more.
And it does not seem the Repubs have the power or the will to do anything about it.
Not looking good at all. Greece is on the verge of bankruptcy and default, and the Greek people my well sabotage by referendum the negotiated EU bailout because it is seen as just too austere on them.
Greek default will impact the other European nations balancing on the verge of default, and European collapse cannot really be contained to Europe.
I watched Ben Bernanke’s press conference yesterday. I wondered if anyone might ask him the pertinent question, “Is U.S. default inevitable?” Of course he would have had to answer ‘no,’ no matter what, since a ‘yes’ would have sent the markets crashing. But there are a lot of smart people who do think a U.S. default is inevitable. That’s why gold prices are skyrocketing.
Even if default were virtually certain, neither the politicians nor the public seem to have the will to think about it long enough to avoid it, preferring to skirt around the edges of smaller issues like Wall Street bailouts and billionaire taxation. None of that will help.
Of course the Fed can still print money. So far. But if foreign governments figure out a way to no longer accept dollars–in payment for oil or other goods–then we will find ourselves in an immediate involuntary austerity program.
I got an ad from AARP asking for a donation to help them lobby for no cuts to Social Security and Medicare. I think I’ll write back to say “what possible good can this do me when the nation goes bankrupt?”
We certainly have these massive government programs to blame for all this debt. Government is trying to take over everything, and it’s killing us all. But another big elephant in the room that no one will ever point to is how many tax paying citizens and job creators we are killing everyday by the hundreds of thousands throughout the world through abortion and contraception (35,000 forced abortions every day in China). If the world would listen to the Church on just these issues alone, and allow people to be born who can contribute to our society, so many problems would be solved. Google “China empty cities” and just see how many hits you get. Go to Europe, and you will notice how few chidren you will see.
We are beginning to reap what we have sown, or not sown, as the case may be.
I agree with this. As Ridgerunner noted above, aging populations place burdens on the national workforce and unduly burden social program. By turning ther nations into welfare states while simultaneously encouraging depopulation through contraception and abortion, Western nations inevitably put themselves on a course of national decline. And now China is beginning to pay a price for its one-child policy.
To spend the money of people who have not been born yet for any program, regardless of its intended benefit, is grossly immoral and on the verge of intrinsically evil. We have no right to steal the money of future generations to pay for political programs now.
The course of national decline has more to do with not adapting to changing economic times. Every entity from the individual to the state governments are adapting, but the federal government will not. Adaption is necessary to survive, and its not particular to this subject.
And now China is beginning to pay a price for its one-child policy.
I still don’t understand while people bring this up. The proper analysis would include why this policy is in place. It followed a period of government encouragement to have as many children as possible, and even given honor to those mothers having more than 10 children. Why don’t people praise the results of this prior policy?..Maybe because it didn’t work out???
The most pertinent change that must be adapted to is the unsustainable debt load.
It’s unlikely that anything the government can do now will help us to grow the GDP sufficiently to grow our way out of it. That leaves devoting more resources to eliminating it, and that means national austerity. And nobody will like that.
I heard Peter Schiff today say that the right thing to do is bad politics, and the wrong thing to do is good politics. The only thing that will save this country is untenable, because the politicians that must vote on it know that it will destroy their political careers.
It isn’t only aging populations. Transfer payments of all sorts are increasingly added to the burden on those whose income is from work. It isn’t just SS and Medicare. Obamacare itself is a big one, and it will only get more burdensome with time. There are double and triple dippers in the various government retirement schemes. There are those on SSD who could work and many who do work. It just goes on and on.
Income from work (Iw) + Income from property (Ip)=Consumption + Transfers.
That’s just an economic fact.
When you realize that support of children (and perhaps spouse) come from the last one “T”, let’s call it, government absorption of T reduces the amount of T available for children and/or a stay at home spouse.
Now, when you also reduce Iw because the worker’s employer pushes down on labor to meet other governmental obligations at all levels, it further reduces the amount of T that is available for voluntary transfers. When government spending produces inflation, that also increases C which, again, reduces T.
And people wonder why wages for most have not increased significantly over the last decade. But, people say, “What about capital. Those people are getting it all instead.”
But that’s wrong because Ip (Income from property …of all kinds) is always the same percentage of national income, no matter what. Since 1929 when the stats were first kept, it has never varied by more than a couple of percentage points. The relationship is pretty inelastic. (For reasons that would be too long here) Ip does go down in terms of actual dollars when the economy is bad, but it actually increases slightly as a percentage of national income. Conversely, when employment is high, Ip goes down slightly as a percentage of national income, but increases in actual dollars.
Since Obama’s hated “millionaires” (except the ones he loves) percentage of Ip is greater by far than it is for middle class workers, they are not as affected by economic downturns in terms of percentages, though they are in actual dollars. And there is really no way out of it, since Ip is always pretty much the same as a percentage of national income, (about 1/3) no matter who is in power and no matter what programs they have.
Trouble is, of course, when you push down Ip by whatever means, while you don’t change the percentages, you depress the national income as a whole.
The important relationship is not between the “rich” and workers. It’s between people who are paid to work and those who are paid not to work, because the two together constitute the sum of national income to workers and non-workers. That sum is about 2/3 of total national income, and that sum only varies by a percentage point or two of national income, no matter what. Therefore, as involuntary transfers go up, income from work goes down as a percentage of national income.
Making it even worse is the fact that the retired nonearners have most of the wealth in this country - and the are taking even more from the working poor. You have three workers struggling to make the mortgage payment, keep the kids in cloths and school paying 15% of their gross wages to one person that has their house and cars paid for and a substantial retirement account socked away.
Sure. No argument from me. And additionally, it costs a lot more to pay SSR to some millionaire than it does to raise a child. SS should be means tested, as the welfare program that it really is. Additionally, there should be dollar for dollar offsets in federal and state pensions and SS. Also, SS should be made “pay as you go”, which would deprive congress of the ability to spend it away when SS contributions exceed payouts.
It’s interesting to look at the history of SS revenue vs payouts. The two have always been very close and are presently about the same number. There was once a modest “suplus” in revenues over payouts, but it has pretty much been “pay as you go” in reality.
And if one wanted to really go radical (and I think I would) all Personal Injury and Workers’ Comp recoveries should be dealt with relative to SSR in the same way they now are with Medicare. There is now a Medicare Set-Aside out of each settlement or award that represents potential Medicare liability when the recipient is on Medicare or can reasonably be expected to be within 30 months. That should be expanded, and such awards should also be subject to a SSR set aside that’s meaningful. It might crowd trial lawyers’ income somewhat and make some claims undesirable, but it would certainly help out with the shortfalls in Medicare and SS.
Think about it, Plaintiff X gets, say, a million dollars because of potential future reductions in income or increases in cost of care. And yet, that same person gets it again with SS and Medicare. I’m not saying the set aside should necessarily be dollar for dollar (though Medicare set aside is, when applicable) but it is ridiculous to pay for “disability” out of insurance premiums, then pay it again out of taxes. Working people pay for the bulk of both.