So what should our children and grandchildren say when they are told their taxes are going up to pay the interest on the $17 trillion in debt this nation has rung up?
How about: “There’s the graveyard. They borrowed the money. Collect from them.”
Maybe it is time to default. Full faith and credit? No one has any faith we’ll ever be able to repay and our credit rating is rapidly declining.
Not only is our debt unsustainable, it is unfathomable, because the feds have been cooking the books.
Just like the Nevada public employees pension program, which claims to have $10 billion in unfunded liability but really has $40 billion, the federal debt is not just $17 trillion and growing by $1 trillion a year.
WSJ illustration
According to a column in The Wall Street Journal this past fall by Chris Cox, a former chairman of the House Republican Policy Committee and the Securities and Exchange Commission, and Bill Archer, a former chairman of the House Ways & Means Committee, “The actual liabilities of the federal government — including Social Security, Medicare, and federal employees’ future retirement benefits — already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.”
For the government to actually pay as we go on all spending and entitlements would require revenue of $8 trillion a year, Cox and Archer calculate. To cover this, they say, confiscating every dollar of income from Americans earning more than $66,000 a year, plus all of the corporate taxable income in the year before the recession, that of course is less now, wouldn’t be enough.
That $1 trillion tax hike Harry Reid wants would hardly cover the nut.
Another sad part of all this is that at the same time we are saddling the next generations with an impossible tax burden, we are simultaneously hobbling them with inferior education, scant employment opportunities and piles of college loan debts.
According to the Department of Labor, in July only 33 percent of 16- to 19-year-olds without any disability had a job. Only 65 percent of able-bodied 20- to 24-year-olds held down jobs.
According to Pew Research data, 63 percent of 18- to 31-year-olds had jobs in 2012, down from the 70 percent in 2007. Fully 36 percent of these so-called Millennials were living in their parents’ homes in 2012, compared to 32 percent in 2007 and 34 percent when the recession officially ended in 2009.
It’s been 30 years since “A Nation at Risk,” was published, declaring, “If an unfriendly foreign power had attempted to impose on America the mediocre educational performance that exists today, we might well have viewed it as an act of war.” Little, if anything, has changed since.
On top of this, as if this camel needed another straw, young people will have to shoulder a disproportionate share of insurance costs under ObamaCare, because the law states no age group will pay more than three times the premiums of another age group, even though older people require five times as much expense as younger people.
To contort Churchill: Never have so many asked so few to do so much with so little.
I am ashamed.
Pew Research graphic
IBD graphic
4TH ST8 
Two-thirds of the youth vote went to President Obama in the last election, so how much of this is a case of the young people getting what they voted for?
They got what they asked for … good and hard.
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The federal deficit is decreasing dramatically.
We have 392 billionaires in this country – and that doesn’t count the thousands that are only worth a few hundred million or so. Few are young – except for those that got rich the old fashioned way. We put everything on the backs of the young, while Conservatives still argue that rich investors deserve to pay lower taxes than those young people who work for their income.
We could take all their money, Rincon and it still would not cover federal obligations.
Oh, god, Nyp going for the deficit cherry.
Even under Clinton in the 90’s the debt increased as the deficit decreased.
Oh my, I do believe the Congress (both houses) changed hands 2 years into the Clinton presidency. Sadly, this time it was only one house of Congress.
Steve: Statists tout the story line that a reduction in the rate of growth of spending is a spending cut, so it’s no wonder that most of them believe that a reduction in the deficit translates into a reduction in the debt.
“Conservatives still argue that rich investors deserve to pay lower taxes than those young people who work for their income.”
Some people view taxes on capital gains and dividends as a second tax. The first tax occurs when the corporation pays its corporate taxes. The second tax occurs when the investor receives his capital gain or dividend and pays taxes on that.
From your posting, Rincon, I’d assume that you don’t agree that the corporate tax diminishes the capital gain or dividend. I was curious why you feel this way?
As an example, if the capital gains tax were doubled, and the corporate tax eliminated, would you feel better about things? Would you consider the system to be more fair under these conditions? Would you be happy that the rich investors were paying more?
1. First, I am glad that there is agreement that the federal deficit is shrinking, not growing.
2. I would certainly be willing to reduce or eliminate the corporate income tax as part of a grand tax bargain that included restoration of a tax on large estates, and elimination of the carried interest exemption for hedge fund managers and, equalization of the tax on the return on capital with that on the return on labor. Perfectly fine with me.
There are other things that generate capital gains besides stock. Real estate and collectables come to mind. Do fine works of art pay corporate taxes? And capital gains is only one part of it. The most egregious tax dodge is the lack of a death tax. Conservatives claim that the money is taxed twice. This is quite untrue. Some isn’t even taxed once. When daddy buys a rare painting, which gains value, and then bequeaths it to his son, who is free to sell it. No taxes are paid on the gain – ever!
It’s true that you pay tax on the money you invest and then pay tax on the profits from that money. News flash: That’s called income. Calling that double taxation is a stretch.
Contrast that with the office worker who gets his paycheck, which has tax witheld and goes home to find a plumbing leak in his basement. He pays the plumber, who also pays tax. The money in his paycheck is taxed twice in one day! ALL money is taxed multiple times.
Yes, Milty, I would be happier with a smaller corporate tax and no loopholes in personal income tax.
“1. First, I am glad that there is agreement that the federal deficit is shrinking, not growing.”
With a bar set as low as shrinking the current deficit, its easy to be in agreement.
I see no mention of the national debt…
“There are other things that generate capital gains besides stock. Real estate and collectables come to mind.”
During WWII, a GI ships out to the Pacific Theater from San Francisco. He likes the city so much that he decides to settle there after the war. He buys a small house at what was then an affordable price. He works a blue collar job for 40 years then retires. He decides to sell the house and retire to Reno because of the lower cost of living there. The small house he bought at a modest price in the late 1940’s now sells for close to a million dollars.
How much tax do you propose that this guy pay on his real estate when he sells it? And please don’t tell me this is an impossible scenario because I saw plenty of these people in the 1980s and 1990s.
“The federal deficit is decreasing dramatically.”
Obama has cut it in half after doubling it. Quite a feat.
What about those unfunded liabilities?
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“When daddy buys a rare painting, which gains value, and then bequeaths it to his son, who is free to sell it.”
Carrying that logic forward, if I buy a sofa for $500, keep it for ten years, then sell it at a garage sale for $50, can I claim a $450 loss when I do my taxes? Or was I supposed to claim depreciation at $45 a year for the ten years?
I’m pleased we all agree that the federal deficit is shrinking rapidly and will continue to do so for at least the next decade.
Milty, your point about paying taxes on a home is well taken and must be taken into account. Capital gains tax should be assessed on the basis of constant dollars. The government deserves no bonus for higher inflation.
The sofa has little to do with a death tax, but in terms of income tax, itdoes not represent a $450.00 loss because you decreased its value by owning and using it. You can, however, take a loss on a stock, because it is not a consumable.
The new liberal soap opera “As the (inflated) Deficit Shrinks” pay no attention to the debt behind the curtain.
“I’m pleased we all agree that the federal deficit is shrinking rapidly and will continue to do so for at least the next decade.”
What was the CBO’s ten year deficit projection in 2003, and how close was it to the actual ten year deficit?
Does ten years qualify as the long term when we’re all dead?
CBO in February of this year: “If the current laws that govern federal taxes and spending do not change, the budget deficit will shrink this year to $845 billion, or 5.3 percent of gross domestic product (GDP), its smallest size since 2008. In CBO’s baseline projections, deficits continue to shrink over the next few years, falling to 2.4 percent of GDP by 2015. Deficits are projected to increase later in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt. As a result, federal debt held by the public is projected to remain historically high relative to the size of the economy for the next decade. By 2023, if current laws remain in place, debt will equal 77 percent of GDP and be on an upward path, CBO projects.”
You are a bit out of date, Mr. Mitchell. In May, the CBO updated its projections to show even more dramatic deficit reduction over the next ten years. The deficit will fall from seven percent of GDP to 2.1 percent of GDP by 2015. By 2023 they only go up to 3.5% of GDP. Even that should go down a bit as ObamaCare continues biting into health cost inflation — remember, most of the fiscal problems we face are driven by health care costs!
So we have a deficit problem sometime in the distant future. All the current hysteria about how we are about to turn into Greece, Greece, I tell you!, turn out to be bogus. And the long-term deficit problem, largely a function of healthcare costs and an aging population, has nothing to do with poor people using food stamps during the recovery from a recesson or student loans, or NIH research, or any of the other things the Congressional Republicans seek to slash.
I was wondering if Nyp had any comment on Reason Magazine’s assessment of the CBO’s May deficit projections?
http://reason.com/archives/2013/05/15/10-takeaways-from-the-latest-cbo-budget
As per usual, there is no such thing as too much debt for a dyed-in-the-wool Keynesian…no matter the consequences…
Haven’t read it. What does it say?
“Haven’t read it. What does it say?”
The title is “10 Takeaways from the Latest CBO Budget Projections.”
The opening paragraph: “Yesterday, the Congressional Budget Office (CBO)—the nonpartisan budget scorekeeper for Congress—released its updated budget projections for the next decade. This year’s deficit projections are down dramatically. So is the federal budget suddenly in good shape? Far from it. In fact, debt levels are expected to remain unusually high for the foreseeable future. But that’s not all the report tells us. Here are 10 takeaways from the CBO’s newest look at the future of federal spending and revenues.”
I figured you’d want to respond to it since it disagrees with your assessment of things.
Nah
Nyp don’t like the suggestion the current sharp reduction in the federal deficit is a one time thing.
No wonder Obama suddenly wants to shutter Fannie and Freddie.
“Nah”
No problem, I kinda figured that you’d be afraid to take this on.
Yeah. Terrified.
[…] On Sept. 6, 1789, Thomas Jefferson wrote to James Madison from Paris, where he was the U.S. ambassador. In the letter he outlined his thoughts and experiences on what we now know as generational grand theft: […]