Great news: The US fiscal gap just jumped $11 trillion … to $222 trillion

posted at 10:01 am on August 9, 2012 by Ed Morrissey

Forget the trillion-dollar deficits for a moment.  Forget today’s $15 trillion in national debt.  The real fiscal disaster isn’t our present — it’s our future, and it just got significantly worse.  Bloomberg economists Laurence Kotlikoff and Scott Burns report that our “fiscal gap,” the measure of future liabilities to future revenue, grew by the same amount as our present public debt to reach $222 trillion.  That’s trillion with a T:

Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.

In the course of that year, the U.S. government’s fiscal gap — the true measure of the nation’s indebtedness – rose by $11 trillion.

The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones. …

The U.S. fiscal gap, calculated (by us) using the Congressional Budget Office’s realistic long-term budget forecast — the Alternative Fiscal Scenario — is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference — this year’s true federal deficit — is 10 times larger than the official deficit and roughly as large as the entire stock of official debt in public hands.

What is the main driver of this fiscal gap?  Mainly, it’s the entitlement liabilities that we have been multiplying for the last eighty years.  When 78 million Americans in the Baby Boomer generation retire, the resulting liabilities will take a  whopping 85% of per-capita GDP to satisfy.  Trillion-dollar deficits are unsustainable; this is flat-out unattainable.  There is simply no way that the US can or will meet those obligations, even if we have another population boom, which seems unlikely. It’s practically the textbook definition of an empty promise.

Kotlikoff and Burns give an idea of the scope needed in policy changes now to eliminate the fiscal gap.  Either we have to immediately increase federal taxes by 64% (and that number goes up for every year we delay), immediately cut liabilities by 40% across the board (including entitlement benefits being paid now), or use a mix of both approaches to reach financial equilibrium.  And that’s what we have to do just to stop further growth in our current national debt, let alone start paying it down.

We’ve been talking about the “fiscal cliff” or “Taxmageddon” coming at the end of the year, but this is the real fiscal cliff we face.  And yet, no one in this general-election cycle has even acknowledged it, let alone proposed a solution to it.  In my column today for The Fiscal Times, I wonder when either political party will focus on the forest rather than the trees, or (more often) the mud at the base of the trees:

The biggest problems, though, are the candidates and the political parties themselves.  The issues that voters want to discuss are broad, complicated, and far-reaching.  So far, though, the response from both sides only nibbles at well-chewed edges of the core issues, with no one seemingly capable of framing a larger debate over the vision for America’s economy for the next several decades.  One side talks about tax burdens, the other about fairness, and so far neither has given voters a comprehensive plan for solving this interlocking puzzle. …

Taxes at the federal level are designed to produce the income necessary for the mission of the US government.  Spending directly relates to the mission.  We need to know the scope and size of the mission before we can determine spending and the appropriate level of taxation.  Do we want the federal government to have plenary jurisdiction in all areas of our lives, where it dictates personal choices and overrides religious objections in the name of the greater good?  We have been traveling along those lines for decades, but still provide funding for only about 60 percent of the annual costs for such a mission.  Do we want a federal government that only absorbs 20 percent of GDP?  Then we need to rest the mission to keep the costs within those boundaries.

What has been missing from the political campaign this year, and truly every cycle since Ronald Reagan’s midterm election, is an honest debate over the mission and resources of the federal government and its component parts.  That is almost certainly by design, since most politicians would be afraid to stand on a comprehensive platform that would immediately alienate a large section of the electorate.  Instead, politicians will tell voters that we don’t need to make tough choices, and end up kicking the can down the road.  Unfortunately, we’re running out of road, and we’re almost at the dead end.  Voters want to know how the candidates proposing turning around, and instead, both sides are arguing about the size of the curbs.

This election should be about competing visions for the future of America, with solid policy supporting each vision.  We just don’t have enough elections between now and when this crisis will hit to waste one.


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Congressional Research Service disagrees.

libfreeordie on August 9, 2012 at 11:03 AM

Yeah. And medicare only costs $9 billion per year too. According to Congressional Research.

lorien1973 on August 9, 2012 at 11:05 AM

I think it’s partially a ploy to get stamp prices higher, quicker. Since it’s not a tax, you can’t say they raised taxes and since it’s the USPS doing it, you cannot blame congress.

lorien1973 on August 9, 2012 at 11:01 AM

The post office is actually turning a decent profit to the tune of about $1 billion per year at current postal rates. What’s causing the “crisis” is the dumb requirement that Congress put in that requires the USPS to fully pre-fund the next 75 years of pension payments. Again, that full pre-funding is something no other organization is asked to do because it is financial suicide.

http://postalnews.com/postalnewsblog/2012/02/10/nalc-congress-turns-200m-usps-profit-into-3-2b-loss/

AngusMc on August 9, 2012 at 11:11 AM

And there you have it. Apparently “big solutions” to our fiscal cliff must only emerge from the right. Which is, of course, why none of our political leaders are interested in tackling the issue.

libfreeordie on August 9, 2012 at 11:04 AM

What’s your solution smart guy? I provided on in this thread, what’s yours?

NotCoach on August 9, 2012 at 11:12 AM

I think you mean that’s the thing with our political class. Apologies, acknowledgement of weakness or failure are things politicians have beaten out of them (in party by voters who understand acknowledgement of weakness as a weakness itself). I’m all for constantly reforming government programs so that they can respond to shifting economic and demographic trends. Social Security has basically functioned in the same way since the New Deal, that is hugely problematic. What I can say about progressives is that we’re skeptical that purely private solutions are good for the society as a whole. What, for example, would retirees do if they had been in a purely private system and been planning on cashing out during the savings and loans crisis of the 80s, during Enron, during the dot com bubble bursting, telecom bubble bursting or the housing market bubble bursting. We’d have a lot of dependent seniors with no safety net to fall back on. There has to be a way to reform the system without scrapping it entirely.

libfreeordie on August 9, 2012 at 10:59 AM

That’s pretty disingenuous. You want government to be as massive as possible (to the point there isn’t enough wealth to pay for it) and you offer the straw man alternative as a purely private system. Liberals bring up this argument every single time they ratchet up spending and government power. Government is exacerbating most of problems it tries to fix.

Believe it or not most people are capable of taking care of themselves even given the vicissitudes of life. And for those few individuals who cannot there are sufficient family, local and community resources to care for them provided by the compassion of those in their communities. The federal government has socialized so many aspects of civil society – from community associations to the institution of the family itself – that it has choked out most other options. The federal government is the worse entity to take care of people – it’s the most remote, unresponsive, opaque, corrupt and ineffective institution to take care of these human problems.

de Tocqueville marveled at the multitude of local community associations created by citizens without government involvement that addressed community problems. Civic associations used to flourish in our country and people took care of themselves.

gwelf on August 9, 2012 at 11:12 AM

You’re pretending the entire 200 trillion is from social security?

libfreeordie on August 9, 2012 at 11:01 AM

Are you pretending ever-expanding entitlements are bankrupting the country?

Good Lt on August 9, 2012 at 11:14 AM

AngusMc on August 9, 2012 at 11:11 AM

I do understand the cause.

But unless congress is using this to reduce the federal deficit; there can be no other reason to force the USPS into default.

Though, I kind of would like this rule applied to all state/federal pensions. I’m sick that way.

lorien1973 on August 9, 2012 at 11:15 AM

Yeah. And medicare only costs $9 billion per year too. According to Congressional Research.

lorien1973 on August 9, 2012 at 11:05 AM

LOL

Good Lt on August 9, 2012 at 11:15 AM

Well, let’s see – backpacking gear (check), hunting rifle w/scope and 2000 rounds ammunition (check), water purifier and other first aid essentials (check), dehydrated food (check), etc, etc.

Cherokee on August 9, 2012 at 11:16 AM

What’s dishonest about this analysis is the fact that the baby boomers are working much later into their senior years than previous generations.

libfreeordie on August 9, 2012 at 10:17 AM

Seriously?!

First of all, do you think this is going to have any financial affect?!
Do you really think the answer is for those baby boomers to just be more “patriotic” and work for an extra 10 years, or death, whichever comes first? I wonder what the societal effects from this new “happy utopia” will be?

Secondly, there was an article yesterday stating that 46% of Americans die with less than $10k in assets, so I think it’s safe to assume at least half of these baby boomers enjoying “worktirement” (to coin a new Obozo era phrase along the lines of the new “staycation”) are doing so out of necessity, not out of a love for working.

Math doesn’t lie, at some point soon, this is all going to start a massive inflationary bubble – the WARNING shot is having people hold off on retirement because they can’t afford too, it’s not a good sign as you seem to think it is.

KMC1 on August 9, 2012 at 11:21 AM

Well, let’s see – backpacking gear (check), hunting rifle w/scope and 2000 rounds ammunition (check), water purifier and other first aid essentials (check), dehydrated food (check), etc, etc.

Cherokee on August 9, 2012 at 11:16 AM

There’s not enough land to do that anymore. We’ve so overpopulated the country, you’ll have neighbors raiding your carcass the second you let off a round to harvest a deer.

KMC1 on August 9, 2012 at 11:23 AM

Hope and Change! and the Emperor’s wrecking ball keeps on swingin’.

Scriptor on August 9, 2012 at 11:23 AM

But unless congress is using this to reduce the federal deficit; there can be no other reason to force the USPS into default.

Though, I kind of would like this rule applied to all state/federal pensions. I’m sick that way.

lorien1973 on August 9, 2012 at 11:15 AM

Like so many laws, no one really thought about the consequences or even really read it. It was first introduced on Dec 7, 2006 and passed both the House and Senate within 48 hours. I think because it had “Accountability” in the title of the law, and who wants to vote against that?

If that same rule applied to all state and federal pensions, all 50 states would declare bankruptcy within a couple years, as would every federal agency. It would be the equivalent of taking out a 30 year mortgage and then suddenly being asked to pay it off in full in year two.

AngusMc on August 9, 2012 at 11:26 AM

LOL

Good Lt on August 9, 2012 at 11:15 AM

Seriously. They thought that!

In 1967 long-run forecasts estimated that Medicare would cost about $12 billion by 1990. In reality, it cost more than $98 billion that year. Today it costs $500 billion.

lorien1973 on August 9, 2012 at 11:27 AM

Either we have to immediately increase federal taxes by 64% (and that number goes up for every year we delay)

We would need to increase taxes in a way that revenues go up 64% – much more difficult than just increasing rates 64%. Also, that would impoverish million more of people, and drive up welfare spending, unless we just let them all starve.

zmdavid on August 9, 2012 at 11:29 AM

Remember:
…100 million Americans on welfare….
…………..massive increases of Americans on Food Stamps….
……………….trillion dollar deficits…..
…………………….trillions added to our debt yearly
………………………….High unemployment
………………………………..GDP to debt ratio over 100%
……………………………………wasting billions on ideological boondoggles while gutting our energy industry……
………K-Street raking in record numbers of dollars on the Hill

……………..
………………is considered “Headed in the right direction” by the “smartest people in the room” that make up Obama’s knee-pad brigade.

Does anybody really think that liberals that praise this type of failure will provide credible solutions to this countries fiscal problems?????
……..the same people who refuse to address the entitlement crisis and think that “taxing the 1%” is the answer to our fiscal problems….
……….the same democrats that can’t even put forth a budget in almost 4 years think they are best suited to make tough,smart,decisions……
………really.

What a joke the democratic party is.

Baxter Greene on August 9, 2012 at 11:34 AM

The 222 trillions dollar debt will be cleaned up come Dec 21, 2012, the End Time according to the Mayans. So only have to budget interest payments for another 4 months.

bayview on August 9, 2012 at 11:36 AM

The party of Rove will save us all !!!

*GAME OVER*

Mr. Arrogant on August 9, 2012 at 11:38 AM

There isn’t. It’s done. You can raise taxes to 100%, and you cannot cover the layouts. There aren’t enough workers for retirees anymore. It’s nearing 2:1, it used to be like 13:1. The math just doesn’t work.

SS was never -ever- designed to pay out benefits. Never was. It was a scam from day one. Originally the retirement age was to be -above- the average life expectancy of people, so it didn’t have to pay out benefits.

I’m sorry that you’ve accepted the lie. I am. I’m sorry. And I don’t know what to do about retirees that were lied to. I don’t.

But the lie is over. It’s time for a grim reality.

lorien1973 on August 9, 2012 at 11:04 AM

Comment of the Day™, though it was in the aggregate that SocSec was never designed to pay outt.

Steve Eggleston on August 9, 2012 at 11:38 AM

The collapse of the socialist welfare state IS INEVITABLE. Welfare, mediscare, socialist security, ALL of it is doomed.

Even the left KNOWS this. $222 TRILLION dollars don’t exist. Even with 110% tax rates it doesn’t exist.

So, why do they still pursue the ever expanding entitlement state?

The answer, of course, is obvious. They DESIRE the collapse of the system because it will collapse the Republic with it, allowing them to replace it with a dictatorial state they control.

wildcat72 on August 9, 2012 at 11:42 AM

Given that income if taxed at the federal level, very often at the state level and sometimes at the local level, I wonder which jurisdiction will be the first to tax the wealthy at a rate over 100% cumulatively. You know it will happen somewhere.

trigon on August 9, 2012 at 11:42 AM

And there you have it. Apparently “big solutions” to our fiscal cliff must only emerge from the right. Which is, of course, why none of our political leaders are interested in tackling the issue.

libfreeordie on August 9, 2012 at 11:04 AM

Those were not rhetorical questions, they were actual questions. I am asking whether people who make 5 million will collect a penny of social security, and if not, why should they pay more for people that never paid in as much as they are getting out of the program?

If you think the answer is that we should force millionaires to pay 99% of what they make so people making under 50k can pay 0 and have the government still give them everything they want, that is fine. Just be honest about it.

milcus on August 9, 2012 at 11:43 AM

What’s dishonest about this analysis is the fact that the baby boomers are working much later into their senior years than previous generations.
libfreeordie on August 9, 2012 at 10:17 AM

Maybe the mental zeros that vote Democrat in the 21st century should demand that their political betters codify that?

MNHawk on August 9, 2012 at 11:44 AM

They DESIRE the collapse of the system because it will collapse the Republic with it, allowing them to replace it with a dictatorial state they control.

wildcat72 on August 9, 2012 at 11:42 AM

Everybody knows this is the endgame. However, I’ve often thought that the military might be a wildcard in that scenario.

trigon on August 9, 2012 at 11:45 AM

Fire up the printing presses! I nominate Obama for the face on the new trillion dollar bill.

zmdavid on August 9, 2012 at 11:45 AM

I don’t know what all the fuss is about. Clearly, the government will be able to continue taxing at roughly 20% GDP as it does today and borrow or print the rest. All is well, just ask Paul Krugman.

Besides, once ObamaCare is fully implemented, the 78 million baby boomers will be forced off the denial of service cliff more quickly than the actuarial models currently assume thus reducing some of that burdensome liability. All is well, just ask Robert Reich.

FerrousOxide on August 9, 2012 at 11:47 AM

The answer, of course, is obvious. They DESIRE the collapse of the system because it will collapse the Republic with it, allowing them to replace it with a dictatorial state they control.

wildcat72 on August 9, 2012 at 11:42 AM

Cloward and Piven strategy. http://www.americanthinker.com/2009/11/clowardpiven_government.html

zmdavid on August 9, 2012 at 11:49 AM

You cannot have an honest debate about these things because the democrats will claim that it isn’t true. Just like the continually claim that there is no entitlement problem, that SS is perfectly solvent, etc.

And the media never calls them on it. They simply report the dems’ claims as if true.

See Libree’s comments on this thread, for instance. They will deny the problem until we are totally and completely bankrupt rather than admit that their policies are failures and we need reform of all these entitlement programs and spending in general.

No dem will ever admit the problem.

Monkeytoe on August 9, 2012 at 11:52 AM

It’s practically the textbook definition of an empty promise.

“practically”…???

It IS

PatriotRider on August 9, 2012 at 11:53 AM

Kotlikoff and Burns give an idea of the scope needed in policy changes now to eliminate the fiscal gap. Either we have to immediately increase federal taxes by 64% (and that number goes up for every year we delay), immediately cut liabilities by 40% across the board (including entitlement benefits being paid now), or use a mix of both approaches to reach financial equilibrium. And that’s what we have to do just to stop further growth in our current national debt, let alone start paying it down.

And that is just to do so in the aggregate. Like Social Security, the rest of the federal expenditures increase faster than the assumed 2.2% real/4.4% nominal GDP growth, to the point that by 2080, just the non-interest portion of federal spending under the Alternate Fiscal Scenario is 31.9% of GDP, or over $96 trillion in current (2080) dollars.

As an aside, if one thinks that the Extended Baseline is much better, it’s not – non-interest federal spending would be 29.6% of GDP, or over $83 billion in current (2080) dollars. It’s just that taxes are expected to suck up 30.0% of GDP, a near-doubling as a percentage of GDP of the 2012 tax take.

I seem to recall a Roadmap that prevented this. I wonder whatever happened to it.

Steve Eggleston on August 9, 2012 at 11:55 AM

A dollar here, a dollar there. Pretty soon you are talking about real money.

Old Country Boy on August 9, 2012 at 11:57 AM

Great image/picture Ed.

SparkPlug on August 9, 2012 at 11:58 AM

I dread the day when someone in the government – someone who has become indifferent to the value of individual human life – realizes that one way to eliminate the problem of future liabilities is to kill the old or permanently handicapped. If such a person became financially desperate enough, and had power behind him, he might well see this solution as attractive.

They might reason this way: “Say, a mere $22,000 spent per person for fifteen years with about 40,000,000 eligible for that money by our present entitlement system, and you have “saved” $13,200,000,000,000. Why, there went a sum more than the total indebtedness! What a clever solution!”

Perhaps we should fix our entitlement system before someone truly ruthless does this kind of math. It has been done before now, if you look not very far back into history.

DrUrchin on August 9, 2012 at 12:00 PM

They DESIRE the collapse of the system because it will collapse the Republic with it, allowing them to replace it with a dictatorial state they control.

wildcat72 on August 9, 2012 at 11:42 AM

Everybody knows this is the endgame. However, I’ve often thought that the military might be a wildcard in that scenario.

trigon on August 9, 2012 at 11:45 AM

Not really. First, they will reduce the military and increase their brownshirts. Then they will bring pressure on the high ilitary officers to toe the line, do dishonorable things, and “honor” makes them resign. They then replace those officers with toadies pledged to their regime. They are already doing this. The military commanders that oppose this dishonor need to stay, not resign. These are the tactics used in ALL the bannana republics and other socialist “democracies.”

Old Country Boy on August 9, 2012 at 12:03 PM

One more tidbit – the immediate 64% tax hike/40% expenditure cut would result in a 2080 deficit that dwarfs Obama’s worst deficit in nominal terms. The 40% expenditure cut would leave a $1.9 trillion ex-interest deficit (19.14% GDP expenditures – 18.5% GDP revenues), whlie the 64% tax hike would leave a $4.7 trillion ex-interest deficit (31.9% GDP expenditures – 30.3% GDP revenues).

Steve Eggleston on August 9, 2012 at 12:03 PM

The military commanders that oppose this dishonor need to stay, not resign. These are the tactics used in ALL the bannana republics and other socialist “democracies.”

Old Country Boy on August 9, 2012 at 12:03 PM

The Democrats are turning us into a banana republic without the bananas.

zmdavid on August 9, 2012 at 12:08 PM

This will all blow over eventually.

Akzed on August 9, 2012 at 10:35 AM

heh

faraway on August 9, 2012 at 12:10 PM

I find my comparative values are wrong. The figures I gave result in $13 trillion, not $13 quadrillion. I guess when the numbers get this big, you start getting confused.

Of course, it’s worrying that the total indebtedness is 22% of a QUADRILLION dollars…

DrUrchin on August 9, 2012 at 12:17 PM

“… the measure of future liabilities to future revenue, grew by the same amount as our present public debt to reach $222 trillion. That’s trillion with a T.”

But Team Romney made a gaff in Poland…

… or something.

Seven Percent Solution on August 9, 2012 at 12:17 PM

If the rich would just pay their fair share we wouldn’t have that $222 trillion in future debt. It would only be $220 trillion.

Dasher on August 9, 2012 at 12:28 PM

If the rich would just pay their fair share we wouldn’t have that $222 trillion in future debt. It would only be $220 trillion.

Dasher on August 9, 2012 at 12:28 PM

You overstate the effect of eliminati…er, soaking the rich – it would leave the cumulative deficit at $221.995 trillion.

Steve Eggleston on August 9, 2012 at 12:30 PM

Not really. First, they will reduce the military and increase their brownshirts. Then they will bring pressure on the high ilitary officers to toe the line, do dishonorable things, and “honor” makes them resign. They then replace those officers with toadies pledged to their regime. They are already doing this. The military commanders that oppose this dishonor need to stay, not resign. These are the tactics used in ALL the bannana republics and other socialist “democracies.”

Old Country Boy on August 9, 2012 at 12:03 PM

They might be able to infect the officer “corpse” (to use Obama’s pronunciation) using institutional control of the academies, but they will never be able to infect the front line soldier, the enlisted men and sergeants who are the real backbone, mainly because true believer libs will never volunteer to serve.

If they do that, replace the officers with toadies who will obey illegal orders and agree to FIRE UPON American citizens I suspect there will end up being A LOT of officers shot by their own troops…

wildcat72 on August 9, 2012 at 12:35 PM

“Cash for Clunkers” with the Pimp in Chief

“In the Ditch” with the Chauffeur in Chief

100 million Americans on the dole, SS and Medicare not even included, with the Welfare Pimp in Chief

Working with Mexico and other countries to bring in more moochers, the Welfare King of them all, legal or illegal, no problem.

Degenerates are in charge.

Retrieve the land from the latrine they made it or live in the same medium and enjoy the stench.

Schadenfreude on August 9, 2012 at 12:37 PM

Obama has made America a toilet in all regards, a Turkish one.

Schadenfreude on August 9, 2012 at 12:38 PM

Obama has made America a toilet in all regards, a Turkish one.

Schadenfreude on August 9, 2012 at 12:38 PM

And he’s turning the Dollar into the Turkish Lira.

wildcat72 on August 9, 2012 at 12:40 PM

What’s dishonest about this analysis is the fact that the baby boomers are working much later into their senior years than previous generations.

libfreeordie on August 9, 2012 at 10:17 AM

Wait.

I thought the talking point was that the Baby Boomers were retiring and causing the Labor Force Participation rate to drop. Can’t be both.

LoganSix on August 9, 2012 at 12:43 PM

LoganSix on August 9, 2012 at 12:43 PM

You’re trying to explain a paradox to a walking definition of same. Lots of luck.

Steve Eggleston on August 9, 2012 at 12:46 PM

I dread the day when someone in the government – someone who has become indifferent to the value of individual human life – realizes that one way to eliminate the problem of future liabilities is to kill the old or permanently handicapped. If such a person became financially desperate enough, and had power behind him, he might well see this solution as attractive.

They might reason this way: “Say, a mere $22,000 spent per person for fifteen years with about 40,000,000 eligible for that money by our present entitlement system, and you have “saved” $13,200,000,000,000. Why, there went a sum more than the total indebtedness! What a clever solution!”

Perhaps we should fix our entitlement system before someone truly ruthless does this kind of math. It has been done before now, if you look not very far back into history.

DrUrchin on August 9, 2012 at 12:00 PM

Luckily, the left can resurrect the Solyent Green project in the nick of time. Obama’s posse will love it as it’s both ‘Green’ and death panel friendly.

CowPuncher on August 9, 2012 at 12:47 PM

What I can say about progressives is that we’re skeptical that purely private solutions are good for the society as a whole. What, for example, would retirees do if they had been in a purely private system and been planning on cashing out during the savings and loans crisis of the 80s, during Enron, during the dot com bubble bursting, telecom bubble bursting or the housing market bubble bursting. We’d havea lot of dependent seniors with no safety net to fall back on. There has to be a way to reform thesystem without scrapping it entirely.
libfreeordie on August 9, 2012 at 10:59 AM

Yoy simply have no clue how money investment works, do you.

Workers near retirement would not have their money in high risk investments, and would therefore have lost very little.

Your argument is that of a simpleton.

spinach.chin on August 9, 2012 at 1:02 PM

Hint to libs: $222 trillion doesn’t exist even if you confiscated all income IN THE WORLD.

wildcat72 on August 9, 2012 at 1:22 PM

Workers near retirement would not have their money in high risk investments, and would therefore have lost very little.

That used to be the case, but not anymore. All the retired/near retired people I know have most of their money in stocks. Interest rates are so low that putting money into safe investments like bonds or CDs gives near zero return, and seniors try to live off only increase on their money rather than principal.

AngusMc on August 9, 2012 at 1:23 PM

I am seriously starting to doubt your claims to be a professor.

NotCoach on August 9, 2012 at 10:40 AM

Not a science, engineering or mathematics professor.

You have to have a lot of education to be as stupid as libfreeordie.

gwelf on August 9, 2012 at 10:42 AM

With a PhD in Post-DaDa Lesbian Haiku what else can you do but become a ‘perfesser’?

This is the problem with ‘everyone must go to college’ plan, and it will lead us to another financial crisis, this time over college debt.

slickwillie2001 on August 9, 2012 at 1:25 PM

All the retired/near retired people I know have most of their money in stocks. Interest rates are so low that putting money into safe investments like bonds or CDs gives near zero return, and seniors try to live off only increase on their money rather than principal.

AngusMc on August 9, 2012 at 1:23 PM

Bonds are still a good investment. Don’t fall into the trap that your friends are in. When you turn 50, you should be moving over to mostly non-risk investments.

Of course, when the city whose bonds you own goes belly up, then you really are SOL.

LoganSix on August 9, 2012 at 1:29 PM

I dread the day when someone in the government – someone who has become indifferent to the value of individual human life – realizes that one way to eliminate the problem of future liabilities is to kill the old or permanently handicapped. If such a person became financially desperate enough, and had power behind him, he might well see this solution as attractive.

They might reason this way: “Say, a mere $22,000 spent per person for fifteen years with about 40,000,000 eligible for that money by our present entitlement system, and you have “saved” $13,200,000,000,000. Why, there went a sum more than the total indebtedness! What a clever solution!”

Perhaps we should fix our entitlement system before someone truly ruthless does this kind of math. It has been done before now, if you look not very far back into history.

DrUrchin on August 9, 2012 at 12:00 PM

That’s already in the works, it’s Obamacare’s death panels, the IPAB. You don’t have to technically ‘kill’ people, just deny them healthcare. Read some of the ghoulish Zeke Emanuel’s writings on how this will work. The provision of life-saving healthcare will be permitted on the basis of “the value of the person in question to the community”.

slickwillie2001 on August 9, 2012 at 1:33 PM

Herman Cain sent me a quarter :D

Buttercup on August 9, 2012 at 1:42 PM

Exceptional!

DarkCurrent on August 9, 2012 at 2:49 PM

…this is why Paul Ryan needs to be the VP. We need to have this fight now, while the bond markets will still lend us money…

MarkNY on August 9, 2012 at 2:57 PM

What, for example, would retirees do if they had been in a purely private system and been planning on cashing out during the savings and loans crisis of the 80s, during Enron, during the dot com bubble bursting, telecom bubble bursting or the housing market bubble bursting. We’d have a lot of dependent seniors with no safety net to fall back on. There has to be a way to reform the system without scrapping it entirely.

libfreeordie on August 9, 2012 at 10:59 AM

This is the biggest load of sh!t that the libs put out.

Vince on August 9, 2012 at 3:26 PM

All the retired/near retired people I know have most of their money in stocks. Interest rates are so low that putting money into safe investments like bonds or CDs gives near zero return, and seniors try to live off only increase on their money rather than principal.

AngusMc on August 9, 2012 at 1:23 PM

What? Over a 30 year period, if only invested in CDs and AAA bonds, you would have a pot load of money right now. Your problem is that you take today’s situation and act like it’s been this way for the last 30 or 40 years!

Vince on August 9, 2012 at 3:30 PM

$222 trillion. That’s almost a quarter quadrillion.

I guess it’s just a matter of time before people start reading and hearing the word “quadrillion.” You might as well learn the word now.

Aitch748 on August 9, 2012 at 3:31 PM

All this greatly increasing debt fits in perfectly with Obama’s real spread the wealth strategy: huge inflation over the years is a great leveler and will also knock down the USA (which he doesn’t like much) a few pegs internationally. Obama only has to be not too obvious about it and keep trying to look like the good guy versus the evil plutocrat Romney and it’s downhill according to plan.

Of course, to really hit the rich he’ll have to – besides big hits with big taxes – confiscate & outlaw their precious metals possessions, but that’s been done before for noble sounding reasons.

I think the coming election is really about spreading your wealth around or not.

Chessplayer on August 9, 2012 at 3:34 PM

Debt 08.03.12: $15,904,628,648,096.12

Debt 01.20.09: $10,626,877,048,913.08

An increase of: $5,277,751,599.183.04
.
.
Public debt on 01.20.09: $6,307,310,739,681.66

Public debt on 08.03.12: $11,121,816,561,855.34

Obama has increased the debt held by the public by 76.33% – SEVENTY-SIX & 33/100 in 1,292 DAYS.

The rest of the numbers can be found on the right side of my blog. http://predicthistunpredictpast.blogspot.com

Resist We Much on August 9, 2012 at 3:38 PM

Easy fix.

Renew at 33. Report to carousel.

tom daschle concerned on August 9, 2012 at 3:40 PM

The last act of political courage IMO was Ford pardoning Nixon (some would disagree).

Happy Nomad on August 9, 2012 at 10:33 AM

Sorry I got to this one late. A more recent example that comes to mind was Reagan firing the air traffic controllers.

IamDA on August 9, 2012 at 3:44 PM

I recently sold my IRA to pay off my credit card debt while the dollars in it still have value. I’m thinking of using the surplus to buy more ammo and maybe finally build that bug-out bag I’ve been meaning to make. I got the feeling I’ll be needing it when the country and the world finally realizes just how screwed this country and the world economy really is and the whole freakin’ system collapses.

I’ve owned forearms for more than a decade as I believe in exercising my 2nd Amendment Rights but as for the disaster preparation paranoia… well, that’s a bit more recent. I’ve long held concerns about our fiscal and economic state but more and more I get the feeling something REALLY bad is going to happen soon… probably before the end of the year.

You all think the entitlement burden is bad, wait and see what happens if the Federal Reserve is ever actually audited and we find out just how worthless our money really is.

Yakko77 on August 9, 2012 at 8:12 PM

Obama administration continues…unprecedented!

socalcon on August 9, 2012 at 8:47 PM

Yakko77 on August 9, 2012 at 8:12 PM

I know. Suddenly the crazy neighbor guy with all the guns doesn’t seem so crazy.

Buttercup on August 10, 2012 at 10:42 AM

Yakko77 on August 9, 2012 at 8:12 PM

We’ve also been saving our brass and learning to reload in case ammo gets scarce. They have some pretty good starter kits out there if you don’t know anybody who’s proficient. Can’t hurt to have the know how.

Buttercup on August 10, 2012 at 1:00 PM

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