[SeaGypsy]

I just stumbled on this chart, what do people think about it? No miracle in sight...

[AgentR11]

The difference is that Detroit can't print currency to pay its obligations.

The bulk of that $218k is in the form of unfunded health&pension liabilities. So, basically both are bad, but they aren't really the same kind of bad, nor is one worse than the other.

[Keith_McClary]

That's per capita. It would be two or three times as much per family. And if you take out civil servants, pensioners and families on unemployment benefits, leaving only private sector workers, it would be more like ten times. Fortunately the 1% still has some taxable assets.

[SeaGypsy]

So ok the US can print it's way out of much of this- perhaps- but doing so won't decrease the real cost of resource extraction or imports. Was it Pops a while back said something about the major economies all having a gun to each other's heads? This looks like the gun...

[ohanian]

Get the treasury to print a $100 Trillion dollars Platinum coin and then walk over to the Federal Reserve Bank to make a deposit.

Now that's what I would call a Money Walk.

[Timo]

Get the treasury to print a $100 Trillion dollars Platinum coin and then walk over to the Federal Reserve Bank to make a deposit.

Now that's what I would call a Money Walk.

I can just see the Bruce Willis movie about that money walk. Bad cop vs bad guy, with the world economy hanging in the balance. The possibilities are endless. Heck, the profits from that movie alone could pay off a substantial portion of Detroit's debt.

[Fishman]

Ah, the Detroitification of America. History would seem to indicate that when a country's debt outweighs its GDP, bad things happen. Welcome to the obamanation, that causes desolation. Inflation follows with all those on disability, welfare, seeing their government check unable to buy a weeks food. But hey, they voted for it. No one, no one would start a business or make major hiring under this administration. OOPS, I stand corrected, 80% of the last job data was part time.
On the side, my figs are coming in gangbusters and my chestnut trees look great, first batch of goumi berry jelly this year.

[Lore]

Correction, no one is hiring under the last two administrations. Corporate America has learned to operate just as effectively with less people, younger part time under paid people, cheap labor from other countries and where that doesn't cut it, automate the hell out of everything.

The wage disparity will continue to grow between the small minority of moochers at the top and the ever shrinking middle class until the lid blows off.

We will never see an honest 6% employment number in the US within most of our life times again, no matter who is in charge of government.

[Timo]

Correction, no one is hiring under the last two administrations. Corporate America has learned to operate just as effectively with less people, younger part time under paid people, cheap labor from other countries and where that doesn't cut it, automate the hell out of everything.

The wage disparity will continue to grow between the small minority of moochers at the top and the ever shrinking middle class until the lid blows off.

We will never see an honest 6% employment number in the US within most of our life times again, no matter who is in charge of government.

Thank you.

[Pops]

Correct me if I'm wrong but figured on an accrual basis, isn't a baby automatically saddled with an "unfunded liability" of millions?
Diaperss, beer, tuition, $50k of living expenses every year for 50 years of working life, then retirement cost too? That's $2 or 3 million that he doesn't have at birth but those are his "unfunded future liabilities" aren't they? Gads, you'd think he would crawl back in!

Come on, future liabilities aren't debt, they are predictions. It makes a good thread title and Fox headline but there is a difference between unfunded liabilities and debt. Debt is real, you borrowed it, you owe it. 15 or 18 trillion or whatever of real debt is a big number but adding liabilities is just spin. Spin by who you ask? Of course by the folks who want to pay even less tax than they do already.

Don't you remember? "Shrink gov 'til it's small enough to drown in the bathtub."

Unfunded liabilities are merely an accountants' prediction of future spending - 75 years out. Again, they aren't debt, just predictions, and we all know how reliable those are. SS and medicare in fact are prevented by law from spending anything other than the payroll tax money they bring in so in fact I don't see how they can have unfunded liabilities.

So, want to get rid of those liabilities? Raise the payroll tax ceiling and means test the benefits and those "debts" disappear instantly. Or along the line of lore's post, put an excise tax on robots to support the humans. lol

I don't have a problem with changing the rules. SS and medicare were designed as pay-as-you-go and if the demographics don't allow them to work as promised then change them.

But for cripes sake dont just swallow whatever line some shock-jock or partisan says whole cloth.

[AgentR11]

You have it mostly right Pops, but you are over estimating the potency of debt in comparison with other liabilities; balance sheet wise they aren't different enough for most to even care. By over estimating the potency of debt, you make the gap in importance between the two seem much larger than it is. Both can be paid or eradicated with the same ink, dribbled on the same paper, and signed by the same person. They both create an expectation of an appropriation at a future date. Anything *bad* that would happen with a default, monetization, or proper payout from collected tax revenue on one type, would happen almost identically with the other type.

In the end though, they work the same,
Debt: law says Feds pay Bob $100 in 2020. (because Bob bought a bond in 2010)
Pension liability: law says Feds pay Bob $100 in 2020. (because Bob drew a salary in 2010)

Both laws are subject to revision at any time by Congress, for any reason they deem appropriate. Anyone thinking there is a mystical force that would defend those payouts from Congressional modification is really living in a fantasy land of BAU must always be BAU.

From a conservative pov, there is a certain irritation in that the Feds can carry a pension liability on their books with no impact on any current operation, revenue, or appropriations, whereas they as a business can not. I disagree with this irritation because in the case of the Feds, they carry the obligation denominated in something that they can create any arbitrary amount of at any time they please; thus it makes no rational sense for such a future obligation to have current period ramifications. Someone buying a long bond to hold though... might want consider what that might mean in terms of their own purchasing power preservation.

[Pops]

Well, I don't think you can default on bonds without big consequences, no matter who signs what. Of course you can inflate them away to some extent, not too much though if you want to keep borrowing at a reasonable rate.

Pensions are closer to bonds in "status" than Meidicare and SS, I agree, a default here would be a bad sign. Not a lot of folks trying to change pensions I don't think, maybe they are. The whole bit about government contracts not having any adversaries since the officials don't give a rip about what happens 50 years hence is completely valid IMO - although I don't know what to do about it.

As I say, they all look the same on the books using accrual basis rules but the programs themselves were designed and actually operate more on a cash basis with a cushion, Pay As You Go - I assume so that they would have flexibility for changing demographics, economic ups and downs, etc.

But Social Security has been jiggered with every year since the '70s when they came up with cost of living adjustment and there haven't been any Power Chair riots. In the '80s parts of the benefits were made taxable as income and in fact the rate increased every year 'til then - it was reduced 2% for a couple of years post-recession and no one freaked out when it was raised back up last year. Changes are a big deal to recipients but they are totally separate from the regular US budget, creditworthiness, etc.

It's hard to get past the politics but at some point IF the economy recovers for whatever period and SS/MC need to be changed they should but they have zip to do with the federal debt. The SS trust has never been mingled with the general fund, it's always been in a Lock Box - another oldie but goodie.

[SeaGypsy]

So do you have a better specific debt analysis Pops?

[Pops]

Here from Wiki

As of 30 November 2012, debt held by the public was approximately $11.553 trillion or about 72% of GDP. Intra-governmental holdings stood at $4.816 trillion, giving a combined total public debt of $16.369 trillion.[4][6]

There is a whole pile of other liabilities; vets and deposit insurance and all the mortgage paper our "quasi-governmental" agencies hold and who knows what but $16T is the gist of the actual debt that must be paid if the world doesn't fall apart.

what's that, $50-60k each if we're 300MM? Not anything to sneeze at!

We owed almost 120% of GDP after the last world war now about 75%. The problem this time is our current "wars" are all of choice and will never end and second, at the end of the last world war we were just hitting our stride. It really was the beginning of the Great Epoch of Oil and our GDP exploded. If we don't start another Great Epoch of [something] soon we may not get a chance to pay this one off.

But lumping SS and Medicare "liabilities" into "debt" is just political theatrics designed to make the average Joe think the problem, big as it is, is even bigger. It's hyperbole to smooth the way to greater spending cuts - even though general revenue and SS/MC have nothing to do with each other.

Poor old Joe has a hard time paying attention and needs a good bumper sticker to catch his imagination - he may not even be able to keep his eyes open through this thread - except to cuss and call me a pinko when he comes to the parts his favorite morning "personality" has told differently.

The problem is, debt, SS & medicare/healthcare are 3 very different problems. Piling them together is like looking at the monthly family budget and trying to decide whether to pay the car payment, pay off the mortgage or have the oil changed in the car - the only thing they have in common is they involve money.

Debt is high, but the main reasons are direct costs of our elective wars and the loss of revenue from, and the stimulus provided to recover from the recession. SS has nothing to do with that (aside from the recent "contribution" shortfalls due to the recession) and healthcare/medicare/medicaid is a whole 'nother story completely.

I just wanted to try and clarify. I have no solution.


(For you fer-ners who aren't familiar, Social Security and Medicare are the US old age pension and healthcare plans for civilian workers, paid for by those workers, a social insurance plan basically.
This is not to be confused with pensions for government workers and vets which are different and paid out of general taxes.
Medicaid is our medical program for the very poor, mostly kids, its a patchwork administered by the states with matching funds from the federalies - a social welfare program)

[rollin]

The chart is bogus, real debt is about 50K per person. The future Social Security and Medicare problem can be solved with a stroke of the pen, raise the max limits on salary that the SSI taxes effect , raise the medicare rate and tax all income, not just wages.

With a 15 trillion dollar GDP it should be no problem to pay the debt down.
First, stop giving all that money to other countries and stop trying to run the world, that will save a huge amount of money.
Second, those minimally hiring corporations that will do anything to not hire Americans only pay 4% of the income tax. They also use our infrastructure, our police and legal protection and our resources to profit. They lately got similar rights to citizens, so let them pay their fair share of taxes, tax them like citizens. They have been getting a free ride too long. Another huge amount of money to balance the budget and pay down the debt.
I am sure that a lot of other changes can be made.

[Plantagenet]

GoogleAppleYahooCiscoStsrbucks etc. have paid essentially no taxes for years. It seems unlikely that will change anytime soon given the standoff between congress and Obama over tax reform

[SilentRunning]

Note to my kids: "Work harder to pay for our Social Security and Medicare. Love: Mom & Dad"

[Expatriot]

Did somebody on this thread actually suggest the debt would be repaid?

Some obvious things will happen:

Medicare and SS benes will eventually be reduced.
U.S. economy will continue slow descent into sh-tter.
Average citizen will get poorer.

These are only monetary effects to a small extent. Sure, the bozos who have been running the show for 60 years have taken on too much debt. At the end of the day, so what? Default on the 16 trillion and be done with it.

Don't forget, folks who get their Chapter 7 discharge are much better credit risks and have much better credit than folks who have been drowning in debt for a couple of years and are certainly going under at some point in the near future.

At the end of the day, this isn't a monetary phenomenon, although that's making the pain greater.
It's an energy phenomenon.

We are on the road back to donkeys, and every day is an incremental step toward that end.

People will get poorer because people must get poorer because the unit cost of energy is climbing and energy=economy.

It's that simple. The rest is noise. Sure, sure, rich get richer and all that, but look back at the 3 million years before the fossil fuel age. Poor people were always there, and in much greater numbers than they are today (and much skinnier).

Poor people have been allowed by the fossil fuel age to not be poor for a while.

When the wash is done, however, a man will be worth what he can produce in a year. Without fossil fuels, a man can't produce much, and so he isn't worth much. What? 300 wagon wheels a year?

Our definition of wealth is skewed by fossil fuels.

Of course poor people will proliferate in the next 100 years. What else can possible happen?

In the big picture of history, the Russian Revolution was a fight over who gets the profits from the fossil fuel age.

[PrestonSturges]

3,000,000 jobs to China under Bush, and W's Secretary of Labor (whose family got rich trading with China). She is now married to Mitch McConnell (R-Bejing).

[PrestonSturges]

No one, no one would start a business or make major hiring under this administration. OOPS, I stand corrected, 80% of the last job data was part time.

The net job creation under Bush is slightly positive only because he bailed out in the early stages of the financial collapse, and even if you average his first and second terms it was 0.1% over eight years. That made Dubya the worst since Herbert Hoover with his negative 5% shrinkage of the labor force.

The highest rate of job creation for the last 45 years was probably under Jimmy Carter, which is why goobers have to work so hard to bury his memory. Also notice job growth is always better under Dems, while deficits always grow under the GOP.
http://en.wikipedia.org/wiki/Jobs_creat ... tial_terms

Lyndon Johnson D 1965–1969 59,583 69,438 +9,855 +3.90%
Richard Nixon R 1969–1973 69,438 75,620 +6,182 +2.16%
Nixon/Ford R 1973–1977 75,620 80,692 +5,072 +1.64%
Jimmy Carter D 1977–1981 80,692 91,031 +10,339 +3.06%
Ronald Reagan R 1981–1985 91,031 96,353 +5,322 +1.43%
Ronald Reagan R 1985–1989 96,353 107,133 +10,780 +2.69%
George H. W. Bush R 1989–1993 107,133 109,726 +2,593 +0.60%
Bill Clinton D 1993–1997 109,725 121,233 +11,507 +2.52%
Bill Clinton D 1997–2001 121,231 132,466 +11,233 +2.24%
George W. Bush R 2001–2005 132,466 132,453 -13 -0.00%
George W. Bush R 2005–2009 132,502 133,631 +1,129 +0.21%
Barack Obama D 2009–2013 133,631 134,839 +1,208 +0.23%