Originally written July 19, 2011
John Hawkins wrote an interesting article today entitled “5 American Economic Statistics That Will Blow Your Mind”. You can find it on Townhall.com, but allow me to condense and paraphrase the essence of the piece and then offer some thoughts about the next generation.
1. The government is “investing in the future” by borrowing $188 million each and every hour. During that same hour, it’s spending $200 million. To put that in perspective, the current negotiations about cutting $2 billion from this year’s federal budget will cover only about 11 hours worth of spending.
2. A typical couple reaching the age of 66 for Social Security are expected to receive in excess of $1 million in social and medical benefits over their remaining lifetime. That will have to be paid for by the next generation of workers, because according to Hawkins, the amount paid into Social Security does not begin to satisfy the amount that must be withdrawn to meet obligations.
3. The government’s appetite for spending cannot be satisfied by simply taxing the rich at a higher rate. There are only a little over 2 million households which make more than $250,000 per year. The deficit alone for 2012 is $1.1 trillion under Obama’s budget, and in order to satisfy the deficit, this “rich group of Americans” would have to pay an average of $500,000 per year. There simply isn’t enough money in this group to fund liberal spending, despite all of the class warfare rhetoric espoused by the White House today.
4. Tax rates have varied up and down over the years, but the amount of revenue collected in relation to the GDP is fairly static. In other words, raising tax rates does not raise more money for government coffers. It’s a myth. People are smart and have options to avoid excessive taxation. They might even stop working or move out of the country if the government pushes the pain threshold for success and productivity too high.
5. Interest rates are historically low. If they revert to higher levels as seen in the 1970s and 80s, the payment on the debt will exceed the amount spent on Medicare or possibly national defense.
I encourage you to read the full article, because whether or not you agree with all of Hawkins’ statistics or opinions, it is reasonable to conclude that liberal spending can never be satisfied. In fact, that is the essence of the problem.
I also found Hawkins article interesting in the context of something a friend told me over lunch yesterday. I dined with a high school teacher that I’ve known for years. He’s constantly surrounded by teenagers. He knows how they think and what they believe. And during lunch he offered a rather chilling prediction of the future.
When the kids who are 16 and 17 years of age right now have grown into their 30s and 40s, the people responsible for passing this massive debt to future generations will be held accountable. That would be my generation. A generation that can’t stop spending money that it doesn’t have. A generation that has trouble living within its means. A generation that has become dependent upon public subsidies. A generation that votes to take money out of other people’s wallets. And ironically, my generation will need to be taken care of by these same kids. Kids who will be governing our country and making decisions regarding the welfare of the older generation.
So it begs the question; If today’s teenagers struggle financially over the next 20 or 30 years because of decisions we are making today, then you just have to wonder how generous or sympathetic there will be to the older, dependant generation.
Just something to consider as we spend their future using borrowed money.