November 15, 2019

America’s Economic Quagmire

If our government raises the debt ceiling in October, we are heading for another Greece. Forget all the news garbage of decreasing deficits. A deficit is still a deficit regardless of what the number is. Every government program today is in trouble because our government operates without a balanced budget. We continually spend more than we, as a country, generate in revenue. Our government will not admit it, but we should raise taxes. Obviously, cutting spending is not an option as no one seriously considers it anymore.

When President Obama entered office in January 2009, there were 31,939,110 Americans on food stamps. As of November 2012, the most recent data available, there were 47,692,896 Americans enrolled, an increase of 49.3%.

The government knows how many people are out of work. The unemployment-to-population ratio hit its low point, 58.1%, for the current economic cycle well after the recession officially ended in July of 2011. There are far more jobless people in America than you might think. Last year there were 86 million people who didn’t have a job and weren’t consistently looking for one. It is a worrisome sign for the economy and partly explains why the unemployment rate has been falling recently. Only people looking for work are considered officially unemployed. As this trend continues, the Chicago Fed expects the labor force participation rate will keep falling, hitting 62.4% by 2020.

Social Security is in trouble as the government not only drained the trust fund but over the years has added more and more people to its roles that have never paid into it. Social Security had been stable in the past but the trend is downward. Today there are just 2.9 workers per beneficiary and the forecast is two workers per retiree by 2030. In 1945, there were 41.9 workers per beneficiary.

As I have mentioned, almost all government programs are in some form of financial crisis. The Social Security disability fund is scheduled to go bankrupt in 2016. There is just not enough money coming in to fund the program. Congress will probably take the easy way out and transfer money from the coffers of Social Security into the disability coffers. But there is no free lunch and simply shifting dollars will weaken a Social Security system that is already looking at going broke by 2037.

Health care costs in the United States are also skyrocketing. Medicare costs are going up and whether or not Obamacare is a success will depend on a lot of factors. But one thing I can guarantee is that whether Obamacare is successful or not, it will cost the taxpayers of the United States a lot more money than was originally forecast. Almost every program the government has sponsored has sooner or later cost more than was originally budgeted.

One thing you can depend upon a candidate running for office is that he or she will tell the Americans what they want to hear and promise them the moon. Will they deliver on their promises? No. It is only a matter of time with our present governmental structure that we will be facing some serious issues. With our national debt at $18.1 trillion dollars and annual deficits running at least $500 billion, we, as a nation, are in serious trouble and face a point of financial collapse. What we need today are some honest politicians that will address the issues and not kick the proverbial can down the road.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer
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