The Obama campaign last week unveiled a new interactive feature supposedly showing how a fictional girl named Julia would benefit from President Obamas policies over the course of her lifetime. The result was an ode to government dependence and a celebration of the cradle-to-grave welfare state. In the Obama campaigns script Julia enrolls in Head Start as a toddler uses government student loans gets Obamacare subsidies throughout her working life and lives off Social Security and Medicare in old age.
Noticeably absent from the presentation was any mention of the mounting debt that the nations welfare-state obligations would impose on Julia or the massive spending for which shed be on the hook if nothing is done to change course. Its worth taking a moment to fill in the blanks.
By the time the hypothetical Julia reaches age 24 (assuming shes born today) the nations debt is projected to rise to 195 percent of its gross domestic product according to the Congressional Budget Offices alternative fiscal scenario (which assumes Congress keeps acting as it has in the past). To put this number in context keep in mind that Greece mired in a fiscal crisis that has threatened all of Europe had an estimated debt-to-GDP ratio of 165 percent in 2011 according to the CIA World Factbook.
The CBO tells us that after 2037 the debt-to-GDP ratio will remain above 200 percent but it doesnt provide an annual breakdown after that. But it does have projections on government spending through 2085 and by the time Julia celebrates her 73rd birthday government spending will equal 76 percent of the nations economic output. In order to raise the revenues needed for such robust government taxes would have to be four times the pos/world/ War II average of roughly 18 percent of GDP. Obviously the economic consequences of taxes of this magnitude would put Julia in Never Never Land.
Though Obama boasts that Julia could depend on Social Security and Medicare when she retires the two programs alone are running a long-term deficit of $63.3 trillion according to projections by the programs trustees released last month.
The Social Security system is already paying out more benefits each year than it is receiving in payroll tax revenue. General tax revenues are currently making up the difference because the rest of the government still owes the Social Security money for the years during which it dipped into the systems surplus. Without changes those IOUs will run out by 2033 and Social Security will have to start slashing benefits by 25 percent.
Of course these dates and numbers are all hypothetical. The economic and financial system would collapse well before the nations debt reached levels multiple times the GDP. But what we know with certainty is that the longer the nation waits to do something the more severe the tax increases and spending cuts will have to be. What is Obamas plan to spare Julia from this bleak future? He doesnt have one. Its much easier to sell voters on a benevolent government that bestows goodies at no cost to anybody.
The Obama campaign last week unveiled a new interactive feature supposedly showing how a fictional girl named Julia would benefit from President Obamas policies over the course of her lifetime. The result was an ode to government dependence and a celebration of the cradle-to-grave welfare state. In the Obama campaigns script Julia enrolls in Head Start as a toddler uses government student loans gets Obamacare subsidies throughout her working life and lives off Social Security and Medicare in old age.
Noticeably absent from the presentation was any mention of the mounting debt that the nations welfare-state obligations would impose on Julia or the massive spending for which shed be on the hook if nothing is done to change course. Its worth taking a moment to fill in the blanks.
By the time the hypothetical Julia reaches age 24 (assuming shes born today) the nations debt is projected to rise to 195 percent of its gross domestic product according to the Congressional Budget Offices alternative fiscal scenario (which assumes Congress keeps acting as it has in the past). To put this number in context keep in mind that Greece mired in a fiscal crisis that has threatened all of Europe had an estimated debt-to-GDP ratio of 165 percent in 2011 according to the CIA World Factbook.
The CBO tells us that after 2037 the debt-to-GDP ratio will remain above 200 percent but it doesnt provide an annual breakdown after that. But it does have projections on government spending through 2085 and by the time Julia celebrates her 73rd birthday government spending will equal 76 percent of the nations economic output. In order to raise the revenues needed for such robust government taxes would have to be four times the pos/world/ War II average of roughly 18 percent of GDP. Obviously the economic consequences of taxes of this magnitude would put Julia in Never Never Land.
Though Obama boasts that Julia could depend on Social Security and Medicare when she retires the two programs alone are running a long-term deficit of $63.3 trillion according to projections by the programs trustees released last month.
The Social Security system is already paying out more benefits each year than it is receiving in payroll tax revenue. General tax revenues are currently making up the difference because the rest of the government still owes the Social Security money for the years during which it dipped into the systems surplus. Without changes those IOUs will run out by 2033 and Social Security will have to start slashing benefits by 25 percent.
Of course these dates and numbers are all hypothetical. The economic and financial system would collapse well before the nations debt reached levels multiple times the GDP. But what we know with certainty is that the longer the nation waits to do something the more severe the tax increases and spending cuts will have to be. What is Obamas plan to spare Julia from this bleak future? He doesnt have one. Its much easier to sell voters on a benevolent government that bestows goodies at no cost to anybody.
