America is going bankrupt - part II
In a recent interview on CNS news, Paul Ryan, the ranking republican on the House Budget Committee speaks about the fiscal path the U.S. government is on and the inevitable results it is due to yield, should a dramatic change in economic spending not happen.
Ryan affirms that all actuaries at the federal government, that is everyone who’s keeping tabs, are predicting that the U.S. government is headed for bankruptcy. The country has grown at an unsustainable pace and it is now more than ever harder to pay the bills. In order to fulfill the commitments and promises for entitlements like social security benefits, medicare and medicaid that the U.S. government has made, which are only the basics, it would take roughly 53 trillion dollars invested at significantly high treasure rates just to pay for these entitlements. If this is not making you nervous, read the paragraph again.
That’s about half a million dollars per household. What’s the solution to this? The congressional budget office, predicts that in order to have these 53 trillion dollars handy the current tax rate for low income families would have to go up to 25%, while the medium bracket income would need to jump to 66%, and the high bracket to 88%. Obviously this is not a realistic plan that can be implemented at anytime for it would simply destroy the economy and trigger another depression.
Keep in mind that this figure of 53 million dollars is only addressing the three major entitlement listed above, these responsibilities currently consume about 60% of the total fiscal budget. This figure does not take into account the need to maintain the national armed forces.
The U.S. has always run under the legacy that each generation confronts the problems of today so that future generations would be better off, safer and wealthier. Unless there are dramatic adjustments to the current spending and necessary changes are made to the entitlement programs so they more realistically reflect today’s economy, there is no doubt that future generations will have inferior living standards, in which we will have massive tax burdens and individual income deficits.
Congressman Ryan further explains that should the government begin to implement the unproposed solution of taxing at higher rates to pay for these programs, the rate of bankruptcies across the country would begin to increase. Further changes to bankruptcy laws can also be expected, while the entire economy would stagnate and surpass Europe in levels of unemployment.
In 10 years time the worse is still to come as the number of baby boomers are increasing every year, the reality will be that these entitlement programs will simply run dry.
In spite of all these facts, it is now harder than ever to get everyone in government to agree that this is a situation that needs immediate attention. It appears that no one really wants to hear it and no one really seems to know what to do about it. Congressman Ryan and his staff however, have proposed a plan, a road map to reform our current spending and taxing that is believed to have accurate and factual data that can restore solvency on a long term basis. The plan was introduced for legislation as (H.R. 6110).
