The Committee for a Responsible Federal Budget reports,
CBO finds debt held by the public will roughly double as a share of the economy over the next three decades, rising from 77 percent in 2017 to 150 percent by 2047.
…A number of major federal trust funds face exhaustion in the coming years, including the Highway Trust Fund in 2021, the Social Security Disability Insurance Trust Fund in 2023, the Medicare Part A (Hospital Insurance) Trust Fund in 2025, and the Social Security Old-Age and Survivors Insurance Trust Fund in 2031.
Of course, for the press, this is a yawner. It’s the CBO “scoring” of the health care bill that makes front page news.
My rule of thumb is that observant people will be about 10 years ahead of what “people are talking about.” 10 years ago it was the hollowing out of the middle class. 10 years from now it will be the fiscal situation and the tough choice between financial distress and inflation.
The disability fund would have gone bust last year had it not been bailed out at the expense of the solvency of old age and survivors fund (ie not a loan from one fund to another, but a simple transfer of some of the revenues for a few years).
That’s like having two fuel tanks, and using fuel at the same rate as before, but also using a ‘transfer pump’ to make sure the one being drained fastest doesn’t go ’empty’.
So what will happen is that every tank will get bailed out by bigger, healthier tanks, until there is no one left to hold the bag, and they all go bankrupt at once.
It had better; there will be a lot of retired depending on it. The idiocy is to say people need to save more for retirement while making it impossible to do so. Rightly so as there is no news in it. There is a time when it will be ripe for solution, but that has not yet arrived.
Is it still no big deal because we owe it to ourselves? Or did that change sometime in early November, last year?
This appears to be a problem in the entire OECD.
Not sure how to change that. Productivity comes form smart people. Smart people aren’t having kids.
What we will get to see in a generation is how two approaches to the problem pan out. Japan simply accepted that population pyramid problem, and will have to deal with that.
The Europeans and Americans tried to solve the population pyramid problem by importing lots of third worlders. Will that help?
Productivity comes form smart people. Smart people aren’t having kids.
Why are not smart people not having any children? If say Singapore according to Garrett Jones is the smartest nation in the world, then that is prime example of avoiding children. (Of course there is Utah we should think about.)
1) How much of the future debt could be solved by larger families? At this point, Japan GDP per capita is growing similar to US but it is impossible to gain total GDP with falling populations.
2) The problem for most smart people and family size are:
2a) They are getting married later in life so limits lifetime fertility. I think this aspect is underrated when discussing family formation today and the older you get (esp. past 25 years) the more likely you socialize with more like people.
2b) Smart people realize it is hard to have both thriving careers and large families. It almost feels like the dual income debates conservatives had in the 1970s was true. (However the single income model will kill labor supply.) I still say the Reagan economy won the lower working class wages but lost the social conservative battle of single income families.
3) In terms of the US, I still have not understood direct correlation of stopping immigration to California and increase WWC wages & work in West Virginia. (I sure there is correlation but is it after redrawing 10 AD & AS curves?) We do have a shortage of workers in California but these positions of fast food and seasonal agricultural work is not what the WWC voted Trump for.
The federal government’s balance sheet consists not just of debt, but also assets and a residual. The important question is whether assets can meet debt obligations. In 2013, the Institute for Energy (http://instituteforenergyresearch.org/analysis/federal-assets-above-and-below-ground/) estimated the value of federal oil, gas and mineral reserves to be greater than $150 trillion. Oil and gas prices have fallen since then, so cut the value of reserves in half to $75 trillion. Even if debt doubles, assets can be sold to pay off the debt.