Posted on 03/07/2011 7:34:11 AM PST by SeekAndFind
A news alert for the Debt Paying Generation: President Obama’s budget for Fiscal Year 2012 brings the national debt from $14.1 trillion to nearly $26.4 trillion by 2021. This will take the amount debt per working American by the end of this fiscal year — all 153,000,000 of them — from $101,150 to more than $161,631. Young Americans are going to get hammered by this debt if entitlement, welfare, and defense reforms are not under way within the next two to five years.
Those 115 million Americans between 5 and 30 years old are going to have to absorb virtually all of this debt. In earlier pieces, we outlined our take on the matter, and how few members of Congress are willing to stand up for the interests of the under-30 generation. Today, we’d like to highlight a warning from the International Monetary Fund (IMF), which has been sending warning shots across our bow for almost a year, and just the last January released yet another report warning of economic pain and disruption for Americans if we don’t get our debt under control.
Of the several studies released by the IMF, the most important was a May 15 report warning the United States that it would have a debt-to-GDP ratio of 100 percent by 2015. An April 30 report also found that of all the debt reductions industrialized nations need to make, the United States requires the second-largest adjustment. This adjustment amounts to full 12 percent of our structural deficits — not quite as bad as Japan at 13 percent, but considerably worse than woeful Greece at 9 percent. Yet Congress will probably not be able to enact these necessary changes.
In order to achieve that 12 percent reduction during the five fiscal years between now and 2015, the average budget cut would have to be equal to equal $395.3 billion per year. Given that the president’s bipartisan debt commission’s recommendations could not even get to Congress for a vote, and that the new budget from House Republicans cuts only $61 billion from 2010 spending levels, how can the American people expect real structural change in the federal budget? Members of the Debt Paying Generation certainly cannot, and rightfully should ask if they will be left holding the bag.
And there’s more than IOUs in that bag. A much weaker economy is part of the burden, too. According to Claudia Reinhart and Hugh Rogoff, authors of the best-selling This Time is Different: Eight Centuries of Financial Folly, countries that amass public debt above 90 percent of GDP inevitably experience sharply slower economic growth and usually debilitating inflation. That means that the Debt Paying Generation could end up with lower incomes and devalued investments while bearing the biggest debt burden in human history. Say hello to virtually no savings and no retirement.
Implementation of the IMF’s recommendations will be next to impossible, for either political party, if the last ten years are any example. With the president’s 2012 budget proposal out but not yet fully analyzed, we decided to put the IMF’s recommendations into real terms based upon the president’s initial 2011 budget proposal. If Congress were to enact the IMF recommendations, it would have to make cuts amounting to 72 percent of defense spending or 145 percent of the president’s proposed Medicaid spending every year through 2015. Or Congress could just eliminate the entire discretionary budget, all of Social Security, and spending equal to two-thirds of our national-debt interest payments for FY 2011 to reach the same total cuts this year, and leave the budget in other years untouched.
It’s time for Americans to step up and place blame squarely on ourselves both for electing ineffective leaders and for not knowing where our tax dollars are going. Approximately 41 percent of the president’s original 2011 budget is taken up by Social Security, Medicare, and Medicaid, programs that this nation can’t afford but that huge majorities of Americans don’t want changed. The program Americans most want to cut? Foreign aid, which amounts to less than 2 percent of federal spending — just $38 billion dollars out of a budget nearly $4 trillion in size.
In order to lift ourselves out of this hole, Americans will need to make tough decisions. Because mandatory spending and defense make up more than 65 percent of the federal budget, reforming entitlement programs for the elderly and indigent, and bringing much needed efficiencies to the Department of Defense, must be undertaken now. Otherwise, the Debt Paying Generation will experience a significant level of financial insecurity. For example, it is widely believed, with good reason, that Americans under 30 are never going to collect any Social Security or Medicare, despite government promises to the contrary. How unfair is it, then, to add insult to injury by loading them down with thousands in additional taxes throughout their lives to repay the policy-driven debts of their parents’ and grandparents’ generations?
We hope the new Congress will address these problems before they hit critical mass in the next two to five year However, history suggests otherwise, and the inertia of the past bodes poorly for the Debt Paying Generation. If Congress does not take seriously the fiscal realities that the IMF has highlighted, young Americans almost certainly will suffer under a lifelong recession.
— William Beach is director of the Center for Data Analysis at the Heritage Foundation. Dustin Siggins is a former policy researcher in the Center for Data Analysis at Heritage.
Well, gee, where did you think the Left was going to find this great “social movement” to push sovereign default followed by increasing Socialism, as in Argentina? Looks to me here like they’ve got a pretty good start on that.
I wonder how many of those vacant-eyed Obama supporting students who rang my doorbell in 2008 now understand that the man they supported is purposely destroying their future standard of living.
Fewer than you’d hope. Most probably still believe if we just “tax the rich” it’ll all work out.
That's right.
And do you know how obscene what the baby boomers have done and are now setting off for 30+ year retirements often funded entirely by borrowing money from the debt paying generation(s).
Puttering around Del Boca Vista in their golf carts.
I have nothing but utter contempt for most boomers.
Why should we stand up for someone who won't stand up for himself?
Remember, it was the under-30 generation that voted in record numbers for the Obamanation of America.
So let them suck eggs...
Was that too mean?
I'm trying not to be mean this morning.
The best thing you can do for your own kids is to see that they get a solid education..professional or trade..and make sure they end up with no personal debt when school is over.
The Govt Student loan programs are going to be an extreme additional burden on a lot of un-suspecting liberal arts grads who have limited earning capability.
>An Emergency for Americans Under 30. Huge burdens, weak economy awaits current generation
One of those huge burdens is the sheer size of the government at present; that is magnified a hundredfold when you consider how fast Bill of Rights guaranteed rights are being repudiated:
— The First amendment prohibits laws which prevent free exercise of religion in schools; and it is not uncommon for just such exercise to be forbidden.
— The Second amendment is so utterly weakened that mere allegations of domestic violence can be used to strip a man of his right to keep and bear arms.
— The Fourth amendment...
a - have you ever refused to answer the question “where are you going?” at a BP checkpoint? Why or why not?
b - have you noticed that warrant-less entries are on the rise?
c - have you noticed that “no knock” warrants are on the rise?
d - have you noticed that the “justice”-system has moved from the actual English of the amendment meaning that “probable cause” is to be the *basis*
for the issuance of a warrant, not an alternative for obtaining a warrant?
THANKS A LOT “WAR ON DRUGS!”
— The fifth.. Kelo v. New London destroys its prohibition on exercising eminent domain w/o paying a fair price AND the requirement that it be ‘public use.’
— The Sixth: have you ever had a quick trial where you didn’t enter a plea-bargaining or say no-contest?
Thanks for the huge backlog making “speedy trial” a joke, War on Drugs!
— The Eighth is supposed a limiter on the fines imposed on people... does that square at all with what you pay for a “speeding ticket”?
— The Ninth is saying “just because we didn’t enumerate it doesn’t mean it’s not a right,” take human reproduction as an example, if the mere
consideration of imposing law/treaty restricting that doesn’t scare you you’re either stupid or fearless.
— The Tenth... That the BATFE has power, and that ObamaCare *might* have power, despite what the States themselves say is proof of how atrophied this one is.
I’m using my personally implemented exemption for those of us who rebuilt the faltering economy (without use of ‘financialism’) from the Johnson, Nixon, and Carter years.
I’m not paying off any debt from Obama’s follies. Those who make bad choices must pay the consequences.
“I have nothing but utter contempt for most boomers.”
####
The “Greatest Generation” ain’t so hot either, what with, for example, their admanant insistence on bankrupting their offspring so that they don’t have to lay out a penny when visiting the doctor.
So true.
Thats nice but the boomers didn’t put all this in place. Rather their fathers (the ‘greatest’ generation) did. Their fathers before them elected a crook & scam artist named Woodrow Wilson. Yes, boomers do have some things to answer for BUT they didn’t happen in a vacuum either. So, you go right ahead w/ your contempt if thats going to make all things right. In the end you’re their spawn (or are you a boomer yourself?). Will you be worse or better than they are?
Agreed.
Then you also must consider that all “working Americans” are not “taxpaying Americans”; and the debt, when distributed among only the actual taxpayers comes in at something over 200% of the figures shown per person.
The “rich” is already paying the majority of the taxes anyway. - Still, Obama & Crew keeps pushing the “hate the rich” button’
They have far wealthier parents, and fewer siblings to share it with, than past generations. A good chunk of them will be fine, never moving out from Mom and Dad’s house, just building their families right there.
“Thats nice but the boomers didn’t put all this in place. “
Exactly right. The system we have in place is SOCIALISM, not capitalism. And they are running out of other people’s money. This goes back to the creation of the FED, which SUPPORTS socialism. Fractional Reserve Banking allows the state, for a time, historically, to keep up the appearances, while the money bubble grows. As long as credit and the population grows, it will be OK.
So, with this nation not growing, with jobs gone to other shores, with credit contracting, the Powers That Be are in trouble.
ALL generations will be affected. ALL OF US. As a mom, who is past fifty, yet I have a teen aged daughter. I see this from both sides. Yeah the boomers were clueless hippies, and they do love their socialism, but I don’t consider myself a boomer. And my daughter. What will be fall her generation? It breaks my heart to see this coming.
The walls of socialism need to come down, but with more than half the nation either miseducated, or relying on it, it will spell trouble.
Something better than this generational infighting will need to be found. In fact, Social Security was in my mind the biggest evil ever brought upon a nation. It has robbed us of our unity, and filled the elders with greed.
This needs to end.
Well Well, now even the National Review and former Heritage Data analysis gurus are giving it “two to five year”. Their kind of pessimism offends me. I give it three to six.
Say goodbye to grandma everyone. We’re going to have to pull her plug to pay off our loans.
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