The US Economy and Spending
Living in the United States - Are We Spending Ourselves into Bankruptcy?
By Nan Wood
For years the United States Government has been adding each year’s deficit into the total of the National Debt. Generally when you hear people discussing the problem, they are usually referring to the current years’ deficit. The problem is much larger than this year’s overspending.
The gap between the amount the government spends and the actual amount of taxes it receives to support this is increasing rapidly. In 2002, the United States Treasury commissioned a study on this subject. The result of the study showed a $45 trillion gap.
Since that time, there have been more tax cuts and discretionary spending has continued to increase. One large increase came in the area of Medicare which now covers prescription drugs.
Former Fed and Treasury economists Jagadeesh Gokhale and Kent Smetters now estimate the gap to be at $63 trillion. Since senior benefits tend to grow almost twice as fast as the economy, the problem will continually grow larger. Baby boomers are reaching retirement and entitlement age. This group is the largest in history to reach retirement at one time.
The unpopular answer would be to restructure benefits thereby reducing the cost for the entitlements given out in the future. Of course this is not a popular approach and it would be hard for the lawmakers to pass the necessary measures to put this into effect.
An equally unpopular way to solve the problem would be to increase taxes or cut actually discretionary spending in other ways. Since there have been no major changes in Social Security since 1983, this program just continues to expand. We will not improve the future by allowing status quo to continue.
Since markets are affected by the economic health of our nation, I am slowly reducing my investments in the market. I was one of the unfortunate people who held a fair amount of technology stock at the wrong time. I am now considering investing in Canada. The Canadians, as well as other countries, have very low fiscal gaps. I am watching to see what moves our politicians make toward closing this fiscal gap to make long term progress in reducing the debt.
Nan is an Account and Business Writer. She has an online research site for information purposes at
RealEstateInfo
By Nan Wood
For years the United States Government has been adding each year’s deficit into the total of the National Debt. Generally when you hear people discussing the problem, they are usually referring to the current years’ deficit. The problem is much larger than this year’s overspending.
The gap between the amount the government spends and the actual amount of taxes it receives to support this is increasing rapidly. In 2002, the United States Treasury commissioned a study on this subject. The result of the study showed a $45 trillion gap.
Since that time, there have been more tax cuts and discretionary spending has continued to increase. One large increase came in the area of Medicare which now covers prescription drugs.
Former Fed and Treasury economists Jagadeesh Gokhale and Kent Smetters now estimate the gap to be at $63 trillion. Since senior benefits tend to grow almost twice as fast as the economy, the problem will continually grow larger. Baby boomers are reaching retirement and entitlement age. This group is the largest in history to reach retirement at one time.
The unpopular answer would be to restructure benefits thereby reducing the cost for the entitlements given out in the future. Of course this is not a popular approach and it would be hard for the lawmakers to pass the necessary measures to put this into effect.
An equally unpopular way to solve the problem would be to increase taxes or cut actually discretionary spending in other ways. Since there have been no major changes in Social Security since 1983, this program just continues to expand. We will not improve the future by allowing status quo to continue.
Since markets are affected by the economic health of our nation, I am slowly reducing my investments in the market. I was one of the unfortunate people who held a fair amount of technology stock at the wrong time. I am now considering investing in Canada. The Canadians, as well as other countries, have very low fiscal gaps. I am watching to see what moves our politicians make toward closing this fiscal gap to make long term progress in reducing the debt.
Nan is an Account and Business Writer. She has an online research site for information purposes at
RealEstateInfo
posted by Nan at 11:15 AM
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