The Coming Generational Storm: What You Need to Know about America?s Economic Future

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  • trumptmantrumptman Posts: 16,271member
    Quote:
    Originally Posted by BRussell View Post


    Nick, here are recent projections on social security. Here's the basic figure:



    What it shows is that, under the intermediate projections, we'd have to raise taxes by 1% or 2% of GDP, from about 5% to 6% or 7%, and not cut any benefits at all. Or we could cut benefits by that same amount, or meet somewhere in the middle. That's easily doable.



    But there's something else that's important: It turns out that the intermediate projection (the line in the middle) has always been too pessimistic.. The social security trustees who do these reports are notoriously conservative in their projections. Most likely, we'll be at the low end of the range, and probably lower than that. That's the bottom of the shaded area. So the most likely scenario is that social security is absolutely fine forever.



    I think people like Samuelson know this, which is why they combine social security with health costs, which does need to be reformed. And we know reform is possible, because every other wealthy country spends about half of what we do.



    [edit] I just wanted to add this to put the revenues into perspective: Bush's tax cuts reduced revenues by about 3% of GDP, which is about twice as much as we'd have to raise to make social security solvent indefinitely. And that's under the usually-pessimistic intermediate projections.



    First you go to Mr. Langer's website and every article, all by him state the same thing. Social Security good and this is because he believes the government will properly honor the bonds in the trust fund. How will he honor them? Let me quote him. I could get into him not believing the government's own numbers, but that can occur latter.



    Quote:

    Withdrawals from the trust fund are expected to start in 2015. Where will Treasury get the money? You usually hear about three possibilities--raise taxes, chop benefits or cut deeply into other spending. But there's a fourth option: the government could borrow some of the money. In fact, that's a strong argument for repaying the debt that's held by the public today. By greatly reducing what we owe, we'll be in good shape if we want to reborrow in the future.



    Which one of those sounds tolerable to you? Raising the taxes insane amounts, chopping the benefits... I thought we didn't have to do that because it was sounds, cutting all other spending, or finding some more nut jobs to loan us even MORE money.



    Now you claim the Bush tax cuts were 3% GDP (I've read a little over 2) and that we only need to raise taxes 2% or so of GDP to make the system sound. This presume that the trust fund actually held assets paying interest instead of government debt. The government needs to first stop spending the surplus and using it to mask to deficit. In addition to our current deficit spending ($200-400 billion a year) we HIDE another $200 billion or so by spending excess Social Security contributions by issuing bonds and spending the cash.



    These little changes add up.



    2% of GDP... service Social Security ($260 billion or so)

    2%-4% of GDP... stop current deficit spending

    1.5% of GDP...replace tax revenue for spending that is currently occurring and being funded by excess SS

    1.5% of GDP...actually begin paying back bonds in trust fund.



    We are talking a minimum of 7% GDP or possibly 9% GDP. None of this actually pays down the national debt. It is what is necessary simply stop accumulating and hiding the current excessive spending.



    We could argue a bit about those numbers sure. Like perhaps we don't need to stop deficit spending which would knock us down to say, 5% GDP tax increase. Of course this presumes anyone politically or in reality would buy into a 5% GDP tax increase to continue to add to the national debt.



    Then we could move on to Medicare which is actually around 400% worse off. This is why Kotlikoff notes that the government labels are not grounded in sound economic science.



    Should we mention that 77 million or so boomers or so are moving, for the most part, off the tax rolls. They may owe some taxes which reduce their transfer payments and so forth, but their primary earning days will be over. The revenues, the massive bulge they've caused in terms of tax revenues and income will be gone as well. All these tax increases will fall on younger earners almost exclusively and there are far fewer of them.



    Quote:
    Originally Posted by SDW2001 View Post


    Well, the government is not a corporation. It's credit is secured by it's unlimited taxing power. So defining it as "broke" is a bit extreme.



    Kotlikoff notes that the fiscal gap is 5 times GDP and 1.2 times all private sector wealth. Since they obviously cannot take 120% of all wealth for example, that is broke. If they were to take all wealth created by the economy for multiple years, much like corporations with supply and demand, people would stop generating wealth to simply have it all taken away. People would stop working if they were simply enslaved to the government.



    Quote:

    There is no solution? Please. There hasn't been one because we're not there yet. A solution will have to be found, unless we start selling off monuments to the Chinese. Things never get done until they have to. I don't accept that there is no solution.



    No one can stop the march of time and it is entirely possible for a country, or portion of the population to put themselves into a permanently untenable position. Regardless of the government position the collective actions of the boomers have doomed them as well. As a nation they took us form net savers to net debtors. They are rolling toward retirement with fewer saved assets, owning less of their home with regard to equity and percentage, more obese and in worse health.



    Kotlikoff and you I suppose note that the solution that would work would be for later generations to take on massive tax rates or to basically spend their lives and perhaps the lives of their children correcting how the Boomers lived their lives, paying their mistakes, etc. That is already highly unlikely, yet if we add to this the fact that the boomers will still hold the reins in terms of shear numbers, votes and thus government and it will become intolerable.



    It would be akin to you having a mother or mother-in-law who squandered her entire ability to earn wealth and even the wealth in her home. Since her house is going back to the bank you build her a mother's quarters off the rear of your home. She declares she cannot deal with a reduced standard of living and moves you into while taking the main home. She then demands to determine that you need to work overtime to finance her continued lifestyle of living beyond her means, and finally declares herself entitled to 80% of your take home pay, all while leaving you with the bills.



    How long do you think that would last? Is there a possible solution? Sure, but when the solution is "we screwed ourselves and now would like to screw you over as well." that won't fly.



    Quote:

    I do agree about the raiding of the trust fund. The only way to stop that is to cut federal spending dramatically. Good luck with that.



    Good luck indeed.



    Quote:

    It could be in place. If we're going to keep the current system, we need to fund it differently.



    How do we fund it differently?



    Quote:

    We have a Republican President in name only. He's a spending whore. As for cuts, well they may not be considered impossible once we have no other choice. That's what I'm saying.



    They will still be impossible. They will simply print money. If boomers haven't been willing to confront their own lack of savings, debtor status, through their whole lives, they won't start when they are most insecure and weakest. The government will run the printing presses. They already do.



    Quote:

    SS is taking in far more than it pays out. For now. Granted, that surplus is being spent, which is a serious problem. But it's solvent in that it's not a debt-creating entity in itself. Not yet.



    It is only solvent because the boomer bulge is paying into it while not drawing from it. The second you reverse that is the second it becomes insolvent.



    Quote:

    Don't be condescending. A more viable analogy would be a guy who has a negative amortization loan at $2000 a month. But that payment will double when the loan hits 125% of it's original value, making is payment $4000. He has $3000 to spend on his housing payment now, so he's fine. When the cap kicks in, he won't be fine. He either has to make more money or take other drastic action. Of course, he also has $90,000 in a home equity loan which he often uses to pay his payments on his $20,000 credit card bill. He is able to pay his other bills...for now. So yes, he's solvent. He just has a shitload of debt and big storm coming.



    That analogy is somewhat accurate but let me point out the manner in which it is most inaccurate. This guy you hypothesize about, wants to keep the house and won't walk away from it. In reality, if your good analogy were real then when the shit hits the fan, he would just walk away. Boomers cannot walk away from their retirement.



    Second thing is this, how does he pay for this home he wants to keep once the fan is hit, he doesn't put his kids on the title, but demands and has confiscated their earnings to make his house payment.



    That is the coming generational storm. If boomers could walk away from their bad decisions and just have no retirement, that would be one thing. They will keep the house, and make their kids pay for the bad mortgage. They will vote in numbers and confiscate the earnings of their children and grandchildren.



    Nick
  • vineavinea Posts: 5,585member
    Quote:
    Originally Posted by Jubelum View Post


    This is EXACTLY what a load of misguided "do something" and socialist "compassion" campaigns land us- sliding toward insolvency.



    Oddly done in a republican adminstration and republican congress implememting a neo-con agenda.



    This is why I think Rush and company are a pack of idiots and anyone that gives those idiots the time of day in the SAME DAMN category. This is why I believe Bush to have been a complete disaster of a president.



    Vinea
  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by iPoster View Post


    Not trying to Clinton bash, but in reality the economy started it's upswing towards the end of H. W. Bush's admin. Unfortunately for him, the numbers didn't come out until just after the election. Can't find a reference online right now...



    BTW, during Clinton's time, we swapped a Republican President for a Democratic one, while swapping a Democratic Congress for a Republican one.





    Sorry but I was around at the tiem and do rememeber what was happening!



    The buzz words for Clinton were " Focus on the economy like a laser beam " and " It's the economy stupid! " thewse came about because of the state of the economy in the early 90's. People were fed up from downsizing ( a euphemistic term for cleaning out the old timers ) and failed policies from the old Bush administration. Clinton focused on paying our bills and balancing the budget. Which he did both. A lot of presidents promise to do this but few delivered! This was followed by the longest running bull market in history!



    Things were still slow in 92. I remember.



    You really can't argue with history.



    Here's a reference : http://en.wikipedia.org/wiki/Late_1980s_recession
  • frank777frank777 Posts: 5,710member
    Quote:
    Originally Posted by jimmac View Post


    Sorry but I was around at the tiem and do rememeber what was happening!



    The buzz words for Clinton were " Focus on the economy like a laser beam " and " It's the economy stupid! " thewse came about because of the state of the economy in the early 90's. People were fed up from downsizing ( a euphemistic term for cleaning out the old timers ) and failed policies from the old Bush administration. Clinton focused on paying our bills and balancing the budget. Which he did both. A lot of presidents promise to do this but few delivered! This was followed by the longest running bull market in history!



    You don't remember what was happening. Or maybe you never figured it out.



    Clinton's campaign was focused on economic matters simply because his advisers knew he couldn't beat the elder Bush on foreign policy or political affairs.



    Seriously, the elder Bush's credentials in world affairs was nearly impossible for anyone to rival.



    It was a great political strategy and got Clinton into the White House. But to confuse that with actual focus on economic policy is silly. "Clinton focused on paying our bills and balancing the budget." is a clever line, but the truth is that the economy was good and it's not hard to pay your bills and balance the budget in good times.



    Anyway, the U.S. President is not capable of manipulating economic affairs as much as most people think.



    A President can show leadership and can focus priorities and introduce special initiatives, but most of the time the White House simply plays defence and attempts to spin whatever economic data comes out.
  • iposteriposter Posts: 1,560member
    Quote:
    Originally Posted by jimmac View Post


    Sorry but I was around at the tiem and do rememeber what was happening!



    Hey now, I'm not that young!



    Quote:

    The buzz words for Clinton were " Focus on the economy like a laser beam " and " It's the economy stupid! " thewse came about because of the state of the economy in the early 90's. People were fed up from downsizing ( a euphemistic term for cleaning out the old timers ) and failed policies from the old Bush administration. Clinton focused on paying our bills and balancing the budget. Which he did both. A lot of presidents promise to do this but few delivered! This was followed by the longest running bull market in history!



    Things were still slow in 92. I remember.



    You really can't argue with history.



    Here's a reference : http://en.wikipedia.org/wiki/Late_1980s_recession



    Since most people like Wiki references, here's one from the page on the 1992 election:



    Quote:

    First, the campaign came on the heels of the recession of 1990-91. While in historical terms the recession was mild and actually ended before the election, the resulting job loss (especially among middle managers not yet accustomed to white collar downsizing) fueled strong discontent with Bush, who was successfully portrayed as aloof, out of touch, and overly focused on foreign affairs.



    I'm not arguing that Clinton didn't focus on the economy, but like Frank777 said, in reality the President only sets policy, Congress makes and approves the specific budgets. You have heard of The Contract with America? It's since been torn up by the current crop of Republicans, but it had a good deal to do with balancing the budget too.
  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by Frank777 View Post


    You don't remember what was happening. Or maybe you never figured it out.



    Clinton's campaign was focused on economic matters simply because his advisers knew he couldn't beat the elder Bush on foreign policy or political affairs.



    Seriously, the elder Bush's credentials in world affairs was nearly impossible for anyone to rival.



    It was a great political strategy and got Clinton into the White House. But to confuse that with actual focus on economic policy is silly. "Clinton focused on paying our bills and balancing the budget." is a clever line, but the truth is that the economy was good and it's not hard to pay your bills and balance the budget in good times.



    Anyway, the U.S. President is not capable of manipulating economic affairs as much as most people think.



    A President can show leadership and can focus priorities and introduce special initiatives, but most of the time the White House simply plays defence and attempts to spin whatever economic data comes out.



    You can try to rewrite history all you want. It doesn't make it true.



    The economy as I'm sure you're aware is cyclic. Neither the president or the rest of the government has any control over this. As I've said before on this subject the president can influence how bad or good the corresponding times are by the actions they take.



    No matter what congress does the president has the final say on what direction we go. We're seeing that now with Mr. Bush. The only option to change this if the president won't budge is legal and messy.



    So Clinton took an improving situation and ran with it so to speak. The result was a surplus that hadn't happened since the 1960's and the longest running bull market in history.



    It's nice when the president and the congress work together isn't it?



    This wouldn't have happened with congress alone. Pure and simple.



    Now we have a president that drags his heals and threatens to hold up government unless he gets what he wants. The opposite situation from the Clinton administration.
  • brussellbrussell Posts: 9,812member
    Quote:
    Originally Posted by Frank777 View Post


    Anyway, the U.S. President is not capable of manipulating economic affairs as much as most people think.



    A President can show leadership and can focus priorities and introduce special initiatives, but most of the time the White House simply plays defence and attempts to spin whatever economic data comes out.



    That's right, but what jimmac said is "Clinton focused on paying our bills and balancing the budget." Governments don't have much impact on economic growth or the business cycle, but they most certainly do have an impact on the budget. And on the budget, there's absolutely no question about what government actions do to the budget. And the Republican fiscal philosophy is founded on the dishonesty that you can cut taxes and not lose revenues, so when they get power, deficits occur.
  • frank777frank777 Posts: 5,710member
    Quote:
    Originally Posted by jimmac View Post


    You can try to rewrite history all you want. It doesn't make it true.



    You clearly need to speak with Clinton's political advisers. They spent a decade bragging on the lecture circuit about the strategy behind the '92 victory, and rightfully so.



    Quote:
    Originally Posted by BRussell View Post


    That's right, but what jimmac said is "Clinton focused on paying our bills and balancing the budget." Governments don't have much impact on economic growth or the business cycle, but they most certainly do have an impact on the budget. And on the budget, there's absolutely no question about what government actions do to the budget. And the Republican fiscal philosophy is founded on the dishonesty that you can cut taxes and not lose revenues, so when they get power, deficits occur.



    I agree with you to a large extent, but it should also be remembered that a big part of the conservative philosophy behind cutting taxes (and thus revenues) is the idea that it's really the only way to focus the bureaucracy on essentials and eventually shrink the size of government and limit its intrusion into citizens lives.
  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by Frank777 View Post


    You clearly need to speak with Clinton's political advisers. They spent a decade bragging on the lecture circuit about the strategy behind the '92 victory, and rightfully so.







    I agree with you to a large extent, but it should also be remembered that a big part of the conservative philosophy behind cutting taxes (and thus revenues) is the idea that it's really the only way to focus the bureaucracy on essentials and eventually shrink the size of government and limit its intrusion into citizens lives.



    Yes but they haven't been doing that for quite some time now have they?
  • frank777frank777 Posts: 5,710member
    Quote:
    Originally Posted by jimmac View Post


    Yes but they haven't been doing that for quite some time now have they?



    Which speaks to why Mr. Bush has pretty much completely lost the support of his base.
  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by Frank777 View Post


    Which speaks to why Mr. Bush has pretty much completely lost the support of his base.





    But the rest of the republicans are still clearly supporting him on things like Iraq aren't they?
  • frank777frank777 Posts: 5,710member
    Well most people, whether left or right, aren't rabidly partisan and will support the best idea they see for a particular problem. I know that's hard for someone like yourself to grasp.



    But just because Bush's personal popularity is hitting the floor doesn't mean people will opt for a knee-jerk pullout in Iraq which may make things a lot worse.
  • trumptmantrumptman Posts: 16,271member
    Holy cow, I thought this thread already had a topic.



    Nick
  • ptrashptrash Posts: 296member
    It's interesting how we define entitilement programs. If the gov't money goes to people we don't like--the poor, the old, the sick, the non-white, the female, the disabled (I'm sure you guys can make a better list than me)--it's entitlement spending. If it's slyly channeled--as research, as defense and homeland security, as incentives for corporate investments, as forgiven debt, as agricultural and other business subsidies--to the angry white men who run America (and their friends and families, you know, that trickle down shit), it's just part of the business of governing and finance.



    It's just amazing that all this talk about giveaways is still going on, when we've seen the total undoing of the effects of much of the new deal and great society social welfare programs, and even reforms enacted to undo the excesses of the Gilded Age. The official statistics are that we've seen a swing of 7% of the nations wealth from the middle class and below to the top percentages of the country since 1979. Somehow I suspect that's a real underestimate.



    I was watching a film yesterday and during the final credits they offered a statistic that black Americans, who make up 12% of the nation's population, own less than 1% of the nation's wealth. Shit, that's too much--they got that through entitlement programs and affirmative action business practices--we need to get that figure back down to 1/2 of one percent. Brilliant idea, we'll have a war on drugs, lock em all up and make them work for free in for profit prison industires. If that doesn't work we'll open poor houses--it's time people stop getting way with welching on their debts. Ok, I'll stop, I'm ranting. Next topic is slavery, and I'm sure they're are some people out there who would argue that it's an efficient economic system.



    What, do you guys want it all? Why not go back to feudal times, and reinstate the nobility while you're at it? Privatize all services that gov't now provides, establish a minimum level of economic output and shoot everyone who doesn't make the quota!
  • ptrashptrash Posts: 296member
    Quote:
    Originally Posted by SDW2001 View Post


    Of course, my preferred solution is to phase out SS as a retirement system entirely over 35 years. Younger workers pay less as we begin phasing out benefit payments. Those who are about to to retire or already retired will still get benefits. But our generation would not collect...however in 20 years we'd be paying almost nothing into it as well. It'll never happen, obviously. But it would get the government out of the mass retirement business.



    Fuck retirement, make everyone work til they drop, preferably at minimum wage or near-minimum wage jobs with lousy benefits. Oh, forgot, we're already doing that for half the country.



    What ever happeend to that life of leisure (the forty hour work week) we were promised if we just all accepted the technological advances of the modern age? Maybe we just misunderstood--there never was any intention of the average citizen benefitting from their increased productivity (they weren't responsible for that productivity, anyway). It was just about putting our lazy asses in cars and giving us 4 minute tv dinners so we could shift the time spent travelling and eating towards working.



    Just remember, what goes around comes around. Revolutions don't happen in well-balanced societies. They feed on injustice--whether real or perceived.
  • tontontonton Posts: 14,064member
    Quote:
    Originally Posted by Ptrash View Post


    It's just amazing that all this talk about giveaways is still going on, when we've seen the total undoing of the effects of much of the new deal and great society social welfare programs, and even reforms enacted to undo the excesses of the Gilded Age. The official statistics are that we've seen a swing of 7% of the nations wealth from the middle class and below to the top percentages of the country since 1979. Somehow I suspect that's a real underestimate.



    Finally someone gets it.



    Giving the lower and middle classes some benefits, a nudge, if you will, benefits society and the economy as a whole.



    It is an investment in the nation's future.
  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by Frank777 View Post


    Well most people, whether left or right, aren't rabidly partisan and will support the best idea they see for a particular problem. I know that's hard for someone like yourself to grasp.



    But just because Bush's personal popularity is hitting the floor doesn't mean people will opt for a knee-jerk pullout in Iraq which may make things a lot worse.





    Frank I know you'll go on eating Bush pabulum forever but it's becoming really apparent that the only thing that will make Iraq worse is staying there.



    I'm not partisan. Y do lean toward the democratic side of things because they have it more right than the republicans but that doesn't mean they're perfect and can do know wrong.



    Iraq on the other hand is wrong no matter how you slice it. Using other conflicts of a similar nature ( Vietnam ) as a model things will get bad no matter when we leave ( You see the guys over there do have minds and agendas of their own ) but it can't get to the point where things get better until we do leave.
  • jimmacjimmac Posts: 11,898member
    Quote:
    Originally Posted by tonton View Post


    Finally someone gets it.



    Giving the lower and middle classes some benefits, a nudge, if you will, benefits society and the economy as a whole.



    It is an investment in the nation's future.



    Oh I think some get this but some just don't want to.



    The class group's numbers you're talking about make up most of the country so it shouldn't take a rocket scientist ( or a brain surgeon ) to figure out it would have a large effect.
  • trumptmantrumptman Posts: 16,271member
    Quote:
    Originally Posted by Ptrash View Post


    It's interesting how we define entitlement programs. If the gov't money goes to people we don't like--the poor, the old, the sick, the non-white, the female, the disabled (I'm sure you guys can make a better list than me)--it's entitlement spending. If it's slyly channeled--as research, as defense and homeland security, as incentives for corporate investments, as forgiven debt, as agricultural and other business subsidies--to the angry white men who run America (and their friends and families, you know, that trickle down shit), it's just part of the business of governing and finance.



    You can attempt to ignore facts by channeling hatred but sadly the facts of the matter get in the way. If anyone has benefited from entitlement programs, it is white men. The concept of spousal survival benefits and things of that nature came after the creation of Social Security. If the primary earners and contributers were white men, so were the beneficiaries.



    Quote:

    It's just amazing that all this talk about giveaways is still going on, when we've seen the total undoing of the effects of much of the new deal and great society social welfare programs, and even reforms enacted to undo the excesses of the Gilded Age. The official statistics are that we've seen a swing of 7% of the nations wealth from the middle class and below to the top percentages of the country since 1979. Somehow I suspect that's a real underestimate.



    Somehow I suspect you believe wealth is a zero-sum game. Wealth is continually created and no transfer payments or any other nonsense you desire to proclaim has moved wealth from the lower to the upper classes. Wages, adjusted for inflation have still grown in all quintiles. The lower and middle classes are wealthier than they have ever been in the past and live better than they ever have.



    Now if you are talking about less of the newly generated wealth being transferred, that is true but since some folks like myself don't believe theft is appropriate just because someone created or earned more, you won't get too far with that.



    Quote:

    I was watching a film yesterday and during the final credits they offered a statistic that black Americans, who make up 12% of the nation's population, own less than 1% of the nation's wealth. Shit, that's too much--they got that through entitlement programs and affirmative action business practices--we need to get that figure back down to 1/2 of one percent. Brilliant idea, we'll have a war on drugs, lock em all up and make them work for free in for profit prison industires. If that doesn't work we'll open poor houses--it's time people stop getting way with welching on their debts. Ok, I'll stop, I'm ranting. Next topic is slavery, and I'm sure they're are some people out there who would argue that it's an efficient economic system.



    You are ranting. Agreed.



    Quote:

    What, do you guys want it all? Why not go back to feudal times, and reinstate the nobility while you're at it? Privatize all services that gov't now provides, establish a minimum level of economic output and shoot everyone who doesn't make the quota!



    You do understand that you are using strange attempts at racism and classism to complain about the most regressive and wealth destroying tax we have right now. How racist is it that Social Security requires everyone retire the same age when black men die earliest of all? Of course how do you explain that if life expectancy is proof of -isms, that white women live longest of all, and white men only live as long as black women?



    Oh I forgot, this is just another recycling of the same rant. Don't think, just hate. Great reasoning you are displaying there.



    Quote:
    Originally Posted by tonton View Post


    Finally someone gets it.



    Giving the lower and middle classes some benefits, a nudge, if you will, benefits society and the economy as a whole.



    It is an investment in the nation's future.



    What a load of crap! There is no return on this investment. Quite the opposite as the "investment" is so costly it requires the seed corn of the future. It requires the sacrifice of the youth to maintain a posh lifestyle for the elderly.



    I've posted the chart in the past that showed the rates of poverty by age and the only group that had gone up was children. You and Ptrash turn off the reasoning centers in your brain when a little -ism is injected to rile you up about something and then each time it is the kids that are harmed.



    Nick
  • iposteriposter Posts: 1,560member
    Wait, we're forgetting about all the illegal immigrants who take jobs from Americans who could be paying into the SS system...



    Oops, wrong topic??
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