As another American presidential election approaches, voters are being bombarded by candidates offering a smorgasbord of wondrous benefits, tax cuts, income tax credits and other tasty treats. And as usual, the issue of whether or not the country can afford it is forgotten in all the hoopla.
One of the most blatant recent examples is the many new hundred-billion-dollar-per-year government-subsidized health care plans currently being offered by political candidates.
Haven’t they heard? America is broke!
If they haven’t, they shouldn’t be running for office. And they definitely should talk to David Walker, the nonpartisan comptroller general of the United States—the nation’s top auditor. Walker is responsible for certifying the government’s books, so he should know exactly what kind of financial shape America is in. According to him, America is in deep trouble.
Politicians simply refuse to acknowledge America’s financial reality. David Walker says he has practically given up trying to get elected officials to take up the issue. For two years now, according to cbs News, Walker has been touring the nation like an Old Testament prophet trying to get America and its leaders to wake up to the financial reality facing them—the reality that America is facing bankruptcy (July 8, 2007).
That financial reality has been called the “dirty little secret everyone in Washington knows.” It is a set of facts so inconvenient that most politicians don’t even want to acknowledge the problem, let alone fix it.
$50 Trillion We Don’t Have
There is nothing difficult to comprehend about Washington’s “dirty little secret.” Even though the numbers involved are fantastically huge, the concept is elementary. Simply put, America has made promises to its citizens, in the form of Medicare, Social Security and government pensions, far beyond the nation’s ability to pay. And each year the problem is ignored, the funding shortfall gets worse by the billions.
Just how big is the shortfall? Walker says it now totals approximately $50 trillion. He calls it the most serious threat facing the nation.
To put $50 trillion in context, the total 2007 federal budget was only $2.4 trillion. But that $2.4 trillion wasn’t even enough to cover current expenditures. The government had to borrow hundreds of billions extra just to pay for all the programs.
Where is this additional $50 trillion going to come from? Even the U.S. gross domestic product, which is the total value of all the goods and services produced in the country for a full year, is only around $13.5 trillion.
If you think higher taxes will be able to cover the massive shortfall, think again. Besides being a political no-no that few politicians would have the nerve to tackle, America’s tax base when compared to the number of retirees is about to start shrinking rapidly.
80 Million Retirees in the Wings
America’s population is aging. Walker calls it a “demographic tsunami” that “will never recede.” The 80 million baby boomers born between 1946 and 1964 are getting set to start retiring—the first ones could retire early in 2008. As they age, it will have a dramatic impact on consumer spending, federal expenditures and tax revenue.
According to the U.S. Bureau of Labor Statistics, the section of the population most responsible for consumer spending is the 45-to-54-year-olds. These are consumers whose earned incomes are peaking and whose expenditures are greatest. They own the biggest homes, have several family vehicles, send their kids to music lessons, and generally contribute the most to the overall economy. Once beyond this age, children move out on their own, the family holiday cottage is sold, and overall spending drops. Once people reach age 65, spending really plummets as couples retire and shift to living on fixed incomes.
The number of people ages 45 to 54 is about to peak in America, after which it is expected to then drop until after 2020. Simultaneously, the number of people retiring and beginning to collect Social Security, Medicare and other government-funded benefits is about to mushroom.
In other words, the economy is about to get double whacked.
The population demographic ramifications are very significant. Seventy percent of all economic activity in the U.S. is consumer spending. The 45-to-54-year-olds drive that spending, but their numbers are about to drop dramatically.
At the same time, there will be more retirees collecting benefits. With Social Security, for example, there were originally 42 people paying into the system for each person collecting. By 2030 there will be barely more than two workers paying for each retired individual. The Social Security caseload is expected to jump from 50 million people to 84 million by 2030, which will be especially painful for government coffers since the SS trust fund is already empty, cleaned out and holding only government ious. Medicare’s caseload is predicted to leap from 44 million to 79 million enrollees. Already Medicare’s hospital insurance fund pays out more than it takes in.
The demographic tsunami is heading our way.
Kathleen Casey-Kirschling was born in Philadelphia on Jan. 1, 1946, at 12:00:01 a.m. Kathleen, who is generally accepted as America’s first baby boomer, will take early retirement when she turns 62 on January 1. America’s first baby boomer isn’t waiting until she is 66 to collect her benefits; she is applying for Social Security right away. Maybe she realizes that the system is approaching insolvency.
The system will go broke. Everyone knows it. No one has the courage to face it.
Instead of preparing for the approaching demographic tsunami, government leaders will probably continue to ignore it. After all, it’s not a pretty picture—increased taxes, reduced benefits, reduced consumer spending, and a rapidly slowing economy—who would vote for that kind of a message, no matter how realistic it is?
America is facing massive economic trouble. Yet at the time strong leadership is most needed, it is lacking. As Walker has stated many times, “The American people are starved for two things: truth and leadership.” Unlike in earlier times, God says that this time leadership would catastrophically fail the modern nations of Israel (Isaiah 3:1-6).
Though the tsunami isn’t here just yet, it is quickly approaching. With elections coming up and big promises hitting the airwaves, conditions may appear better. But you can be sure that America’s fiscal hole will just get deeper and deeper.
Then, one day soon, the fraud and deceit of today will end in sudden destruction in the form of financial collapse. As Isaiah 30:12-13 say, the collapse will be fast, like a swollen wall “whose breaking cometh suddenly at an instant”—kind of like a tsunami.
For proof Isaiah is referring directly to America, and for the underlying causes of this coming collapse, request a free copy of The United States and Britain in Prophecy.