Joe Doakes from Como Park emails:
Every year for the last 40 years, the United States has run short of money in the budget. To fill the shortfall, the General Fund borrowed from the Social Security fund, but that still wasn’t enough. To make ends meet, we borrowed even more. The total accumulated debt is now $20,000,000,000,000. That’s twenty trillion, with a T.
That number does not include the cost of promises the government will be obligated to pay in the future such as Social Security and Medicare, the 20 trillion number is only the total of the promissory notes signed to fund government operations in the past. Covering the cost of all government promises is closer to 100 trillion, give or take, depending on who you talk to.
We’re not paying down the debt. We’re making the minimum monthly payments on existing debt while running up ever more debt, month after month, with no end in sight.
I don’t care whose fault it is.
No, I really don’t care whose fault it is. Finger-pointing and blaming is useless blather, at this point.
I want to know what we’re going to do about it.
The reason it comes up is because Republicans in Congress are talking about reforming Obama-care to make it affordable enough that the government can continue to offer the program, but Democrats are screaming the reforms will make the program unaffordable for individual citizens. Both have fair points. Both fail to address my point.
Can government programs run in the red forever? Can public debt be accumulated forever? Is there literally no limit to how much debt we can run up?
If so, why? That’s not true for private individuals or corporations. If it’s true for government, there must be a reason why it’s true. What’s the reason?
Joe Doakes
Let’s ask Paul Krugman.
See Weimar Republic, Greece, Zimbabwe (whose treasury once issued a 100 billion or trillion dollar note, I forget which), and currently Venezula. Oh and we probably take the worlds economy down with us in the process. Also I had a financial advisor come into our work a few months ago and kept trying to reassure us young people that social security will still be there for us millenials when (or more accurately if) we retire. I tried to not burst out laughing so hard. Thanks Gen X and Baby Boomers.
For all the yammering about the “debt limit”, it’s all a side-show.
Congress’s debt limit is the limit as to how much the promise they won’t borrow. It’s a self-imposed limit, and has as much reality as a gambler promising he won’t spend more than $500 at the casino. Congress can change it with a vote.
The real debt limit is how much people are willing to lend us. And that’s not something Congress can change.
And here’s the thing – we passed that limit in the early years of the Obama administration. That’s what that whole “quantitative easing” thing is all about.
We’re not borrowing to cover the debt, we’re creating fake money and pretending to borrow it.
And there’s a limit to how long we can keep paying our bills with invented money before people decide that the money isn’t work anything.
In the Carboniferous Epoch we were promised abundance for all,
By robbing selected Peter to pay for collective Paul;
But, though we had plenty of money, there was nothing our money could buy,
And the Gods of the Copybook Headings said: “If you don’t work you die.”
– Rudyard Kipling
Not to worry, because we will simply run the government according to ERISA standards, requiring that future benefits be “covered” by dollars available. So, take the total of “unfunded liabilities” including Social Security, Medicare, Medicaid and the debt (somewhere between $100 and $150 Trillion), divide by the GDP (16-18T/year), and you find the simple solution. We just raise taxes to 100%, on everybody and everything, for the next 7 years! Simple! Oh, there may be a few unintended consequences, but what the heck, this is a serious problem.
Zimbabwe (whose treasury once issued a 100 billion or trillion dollar note, I forget which)
Ha! I actually have one. It has an expiration date.
We just raise taxes to 100%, on everybody and everything, for the next 7 years!
Nope, only on the rich 1%. They have to pay their fair share, dontchaknow? Go Galt!
I want to know what we’re going to do about it.
Civil disobedience by doing exact same thing goobernment is doing? Set up a money printing enterprise in your basement?
…paging Dave Ramsey….rice and beans time for bureaucrats!
POD;
I would have been ROFLMAO when I heard that.
Next time, do what I always do when I hear that bullshit from an ignorant financial planner like that;
First, tell them that Social Security has been bankrupt sine the late 60s when the DemonRATs stole the money from it, put it in the general fund, then spent it on all of their fiscally irresponsible and stupid programs. What passes now for SS is a shell game, played with inflated money.
Then ask them this; “When did Congress put the funds back into SS and did they issue IOUs to those accounts, too? They are just kicking the can down the road”!
Then, sit back and enjoy the meltdown. Epic!
I want my own account, I’m tired of paying into a system that I’ll never see even a negative return on my money. I wish Bush had gotten those private, optional, opt-in SS accounts through in 2005 when he had the political capital to. Maybe Trump will try at some point…
If so, why? That’s not true for private individuals or corporations. If it’s true for government, there must be a reason why it’s true. What’s the reason?
Very simple answer: Government is the only organization in this country that can legally collect all of its revenue at gunpoint.
If so, why? That’s not true for private individuals or corporations. If it’s true for government, there must be a reason why it’s true. What’s the reason?
While Bill is correct that government can extract revenue at gunpoint (and does, arguably), it is simultaneously true that government cannot impose a tax on wealth that does not exist. Again, it needs to be rice & beans time for a lot of those sucking at the public teats, or else a lot of bad things are going to happen.
POD;
There was a city or county employee union in Texas that I read about a few years ago that opted out of Social Security and privately invested the funds with a financial manager. The highlight was that their IRAs and even their government union pension accounts, were outperforming SS and their state union’s funds by if I recall correctly, 52%.
As I believe I have pointed out before, Canada’s equivalent to SS, has been privately managed for years. They reportedly have a very large surplus.
Can government programs run in the red forever?
I’ve been reading your post my entire adult life. If I told my 25 year old self that in 2017 we still haven’t paid the price I’d have been flabbergasted.
bosshoss,
You were thinking of Galveston County, Texas:
http://www.ncpa.org/pub/ba514