15 Reasons Why Barack Obama’s Debt Commission Is An Exercise In Futility – The U.S. Government Will Never Have A Balanced Budget Ever Again

In a surprise move, the co-chairs of Barack Obama’s national debt commission released their preliminary proposals to the media on Wednesday.  The proposals are actually quite modest – they recommend that nothing be implemented until 2012 because of the weak economy, and their plan would not balance the federal budget until 2037 – but almost as soon as it was released Democrats and Republicans both started screaming bloody murder about how they would not support it.  The truth is that virtually none of our politicians are willing to make the hard choices that would be necessary to get the national debt under control.  Today, the U.S. national debt is rapidly approaching 14 trillion dollars and it is growing at an exponential rate. It is the single largest debt in the history of the world, and it has increased in size for 53 years in a row.  It would be very difficult to understate the true horror of the debt that the U.S. federal government has accumulated.  So what is the solution?  As you will see below, there isn’t one.  In fact, it will be an absolute miracle if our leaders are able to even slow down the rate at which the debt is growing in the years ahead.

The deficit reduction plan put forward by Erskine Bowles, a former White House chief of staff under Bill Clinton, and Alan Simpson, a former Republican Senator from Wyoming does not even have support from the rest of Barack Obama’s national debt commission.  There is no way that either most Democrats or most Republicans in Congress will ever accept it.  But at least the Bowles-Simpson plan is making headlines around the world and has brought the national debt back to the center of the political debate in this country.

In some ways, the Bowles-Simpson plan is a complete and total fantasy.  For example, it assumes that the U.S. economy is going to fully recover and will experience solid growth for many years to come.  That simply is not going to happen.  The prosperity of the last couple of decades has been fueled by the biggest debt bubble in the history of the world, and there is no way that is going to continue.  At some point the U.S. economy is going to fall apart like a house of cards.

But even if the U.S. economy could magically meet the projections contained in the Bowles-Simpson plan, it still contains a whole host of “poison pills” which make it completely and totally unacceptable to both political parties….

*The plan calls for deep cuts to U.S. military spending.  The Republicans will never go for that.

*The plan reduces Social Security benefits to most retirees in future decades.  The Democrats will never go for that.

*The plan raises the Social Security payroll tax cap to $190,000.  The Republicans will never go for that.

*The plan envisions a very slow rise in the retirement age from 67 to 68 by 2050 and finally to 69 by 2075.  The Democrats will never go for that.

*The plan includes a “less generous” annual cost-of-living adjustment for Social Security benefits.  Considering the fact that Social Security benefits are already not going to see an increase this upcoming year, this proposal is likely to upset a large number of seniors.

*The plan calls for the federal tax on gasoline to approximately double by 2015.  The Republicans would never go for that, and if that was ever implemented it would have a very serious negative impact on the economy.

*The plan would eliminate the deductibility of mortgage interest payments.  Millions upon millions of homeowners would be absolutely furious.

*The plan would tax health benefits provided by employers.  That would make millions of people very angry.

*The plan also calls for huge cuts in farm subsidies.  There are a lot less farmers than there used to be, but that would still be extremely unpopular.

But the truth is that hard choices need to be made.  The national debt is spinning wildly out of control.  The U.S. government is essentially bankrupt.

Unfortunately, the majority of the federal budget is made up of entitlement programs.  Entitlement programs are not subject to budget freezes or budget cuts – unless Congress changes the underlying laws.  But any change to major entitlement programs would potentially upset millions of voters.

Not that there are not other areas that could be cut.  Today, the average federal worker earns far more than the average private sector worker.  In fact, wages for federal workers have been escalating at a frightening pace.  In 2005, 7420 federal employees were making $150,000 or more per year.  Today, 82,034 federal employees are making $150,000 or more per year.  That is more than a tenfold increase in just five years.

But any major cuts to federal spending are going to really upset a lot of voters, and our politicians really, really like to get re-elected.  The kinds of cuts that are really needed will never get through the Democrats in Congress and the Republicans in Congress and signed into law by Barack Obama.  There are just way too many things that both major political parties consider to be “untouchable”.

Meanwhile, the U.S. government debt continues to explode.  The debt is already so big, interest on that debt is scheduled to escalate so dramatically, and we have made so many unsustainable promises regarding Social Security and Medicare that it is basically impossible to balance the federal budget at this point.  If serious attempts were actually made to balance the budget in 2011, it would likely create a financial panic, and suddenly sucking over a trillion dollars in federal spending out of the system would crash the economy.

The following are 15 facts that reveal just how obscene the U.S. national debt has become, and why it is now basically impossible to balance the budget of the U.S. government at this point….

#1 On average, the U.S. government accumulates about 4 billion dollars more debt each day.

#2 In just the last 30 years the U.S. government has accumulated 12 trillion dollars more debt.

#3 According to a U.S. Treasury Department report to Congress, the U.S. national debt will climb to an estimated $19.6 trillion by 2015.

#4 The U.S. government has to borrow 41 cents of every dollar that it currently spends.

#5 If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the annual U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion.

#6 The Congressional Budget Office projects that the health care bill recently passed by Congress will add an additional trillion dollars to our debt over the next ten years.

#7 Approximately 57 percent of Barack Obama’s 3.8 trillion dollar budget for 2011 consists of direct payments to individual Americans or is money that is spent on their behalf.  Any attempt to reduce those payments will make a lot of people very angry.

#8 According to the Congressional Budget Office, in 2010 the Social Security system will pay out more in benefits than it receives in payroll taxes.  That was not supposed to happen until at least 2016.

#9 Back in 1950, each retiree’s Social Security benefit was paid for by approximately 16 workers.  Today, each retiree’s Social Security benefit is paid for by approximately 3.3 workers.  By 2025 it is projected that there will be approximately two workers for each retiree.

#10 According to an official U.S. government report, rapidly growing interest costs on the U.S. national debt together with spending on major entitlement programs such as Social Security and Medicare will absorb approximately 92 cents of every dollar of federal revenue by the year 2019.  That is before a single penny is spent on anything else.

#11 Right now, interest on the U.S. national debt and spending on entitlement programs like Social Security and Medicare falls somewhere between 10 percent and 15 percent of GDP each year.  By 2080, they are projected to eat up approximately 50 percent of GDP.

#12 The present value of projected scheduled benefits exceeds earmarked revenues for entitlement programs such as Social Security and Medicare by about 46 trillion dollars over the next 75 years.

#13 After analyzing Congressional Budget Office data, Boston University economics professor Laurence J. Kotlikoff concluded that the U.S. government is facing a “fiscal gap” of $202 trillion dollars.

#14 At our current pace, the Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

#15 Sometimes we forget just how big a trillion dollars is.  If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.  The U.S. national debt increased by more than a trillion dollars last year, it will increase by more than a trillion dollars this year and it is being projected to increase by more than a trillion dollars the following year.

We are literally drowning in debt.  We have been living beyond our means for decades, and most Americans do not understand that eventually that is really, really going to start catching up with us.

Already, the United States is fading as an economic power.  According to the Conference Board, China will surpass the United States and will become the biggest economy in the world by the year 2012.

That is just two years away.

So how did we get into such a mess?  Well, it all goes back to the creation of the Federal Reserve in 1913.  The Federal Reserve was created to enslave the United States government in an endlessly growing spiral of debt from which it would never be able to escape.

That is exactly what has happened.  Our money is actually debt-based.  That is why they are called “Federal Reserve notes”.  When the Federal Reserve creates more money for the U.S. government to borrow, it does not also create money for the interest to be paid on that debt.  Eventually the U.S. government is forced to borrow even more money just to keep up with the game.

Today, if you gathered up all of the physical currency from every bank, every business and every individual in the United States, you would not even put much of a dent in the national debt.  That is how bad things have gotten.

A lot of people got elected to Congress by promising to balance the federal budget and by promising to start reducing the U.S. national debt.  But those ships have sailed.  The U.S. government will always have a national debt under the Federal Reserve system, and things have gotten so bad financially for our government that it is now virtually impossible to even balance the budget for a single year.

In the 90s, the Clinton administration and the Republican Congress briefly balanced the federal budget by “borrowing” massive amounts of money from the Social Security surplus.  Using GAAP accounting, the budget was not even close to balanced at that point, but many point to that time as a moment when the U.S. government was at least somewhat fiscally responsible.

Well, the Social Security surplus is gone forever.  Now we have a Social Security deficit which is only going to explode in size in future years.

In addition, the financial condition of the U.S. government has deteriorated enormously over the past 10 years, and things only look worse the further you look into the future.

Meanwhile, the U.S. economy is falling to pieces all around us.  We are experiencing our longest bout of serious long-term unemployment since the Great Depression, 42 million Americans are on food stamps and the United States is being deindustrialized at a pace that is mind blowing.

As America continues to get poorer, the U.S. government is going to really struggle to raise revenue.  But interest payments and financial obligations are projected to escalate wildly.  At this point it is really hard to envision a scenario that does not lead to the eventual financial collapse of the U.S. government.

So do you think that you have a solution to this gigantic mess?  If so, feel free to post it in the comments section below….

Is America In Decline? 24 Statistics About The United States Economy That Are Almost Too Embarrassing To Admit

Does anyone really want to hear that America is in decline?  For decades, most of us have been raised to believe that the United States is “number one” and that anyone who doubts that fact is a “gloom and doomer” that should just pack up and move to “Russia” or “Iraq” or some other country where things are not nearly as good.  But does it do us or future generations any good to ignore the very serious signs of trouble that are erupting all around us?  The truth is that it is about time to wake up and admit how much trouble we are actually in.  The U.S. government is absolutely drowning in debt.  The entire society is absolutely drowning in debt.  We are being slaughtered in the arena of world trade, and every single month tens of billions of dollars (along with large numbers of factories and jobs) leave our shores for good.  Our infrastructure is failing, our kids are less educated and our incomes are going down.  We have serious, serious problems.  At one time, the U.S. economy was so dominant that it was not even worth talking about who was in second place.  That is no longer the case in 2010.  Our forefathers handed us the greatest economic machine in history and we have allowed it to fall apart right in front of our eyes.  A national economic crisis of historic proportions is getting worse with each passing month, and yet most of our leaders seem to be asleep at the switch.  

So is American in decline?  Well, read the statistics below and decide for yourself.  The reality is that when you start connecting the dots it gets really hard to deny what is going on.

Urgent action must be taken if things are going to be turned around.  It is time to get our heads out of the sand.  It is not guaranteed that the United States will always be the greatest economy in the world or that we will even continue to be prosperous. 

For many Americans, it will be incredibly difficult to admit that our nation has become a debt addict and an economic punching bag for the rest of the world. 

But if we are never willing to admit what the problems are, how are we ever going to come up with the solutions?

What you are about to read below is going to absolutely shock many of you.  But hopefully it will shock you enough to get you to take action.  We desperately need to change course as a nation.

The following are 24 statistics about the United States economy that are almost too embarrassing to admit….

#1 Ten years ago, the United States was ranked number one in average wealth per adult.  In 2010, the United States has fallen to seventh.

#2 The United States once had the highest proportion of young adults with post-secondary degrees in the world.  Today, the U.S. has fallen to 12th

#3 In the 2009 “prosperity index” published by the Legatum Institute, the United States was ranked as just the ninth most prosperous country in the world.  That was down five places from 2008.

#4 In 2001, the United States ranked fourth in the world in per capita broadband Internet use.  Today it ranks 15th.

#5 The economy of India is projected to become larger than the U.S. economy by the year 2050.

#6 One prominent economist now says that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

#7 According to a new study conducted by Thomson Reuters, China could become the global leader in patent filings by next year.

#8 The United States has lost approximately 42,400 factories since 2001. 

#9 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.

#10 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.

#11 In 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent.

#12 The television manufacturing industry began in the United States.  So how many televisions are manufactured in the United States today?  According to Princeton University economist Alan S. Blinder, the grand total is zero.

#13 As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time that less than 12 million Americans were employed in manufacturing was in 1941.

#14 Back in 1980, the United States imported approximately 37 percent of  the oil that we use.  Now we import nearly 60 percent of the oil that we use.

#15 The U.S. trade deficit is running about 40 or 50 billion dollars a month in 2010.  That means that by the end of the year approximately half a trillion dollars (or more) will have left the United States for good.

#16 Between 2000 and 2009, America’s trade deficit with China increased nearly 300 percent.

#17 Today, the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States.

#18 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

#19 American 15-year-olds do not even rank in the top half of all advanced nations when it comes to math or science literacy.

#20 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009.  That was the second yearly decline in a row.

#21 The United States has the third worst poverty rate among the advanced nations tracked by the Organization for Economic Cooperation and Development.

#22 Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.

#23 U.S. government spending as a percentage of GDP is now up to approximately 36 percent.

#24 The Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.

Please share these statistics with as many family members and friends as you can.  It is time to get real.  It is time to admit that we have some really big problems.

America is in decline and the situation is getting worse by the day.  If we are not willing to admit how bad things really are, then we are never even going to have a chance to find the solutions that we need.

11 Long-Term Trends That Are Absolutely Destroying The U.S. Economy

The U.S. economy is being slowly but surely destroyed and many Americans have no idea that it is happening.  That is at least partially due to the fact that most financial news is entirely focused on the short-term.  Whenever a key economic statistic goes up the financial markets surge and analysts rejoice.  Whenever a key economic statistic goes down the financial markets decline and analysts speak of the potential for a “double-dip” recession.  You could literally get whiplash as you watch the financial ping pong ball bounce back and forth between good news and bad news.  But focusing on short-term statistics is not the correct way to analyze the U.S. economy.  It is the long-term trends that reveal the truth.  The reality is that there are certain underlying foundational problems that are destroying the U.S. economy a little bit more every single day.

11 of those foundational problems are discussed below.  They are undeniable and they are constantly getting worse.  If they are not corrected (and there is no indication that they will be) they will destroy not only our economy but also our entire way of life.  The sad truth is that it would be hard to understate just how desperate the situation is for the U.S. economy. 

Long-Term Trend #1: The Deindustrialization Of America

The United States is being deindustrialized at a pace that is almost impossible to believe.  But now that millions upon millions of people have lost their jobs, more Americans than ever are starting to wake up and believe it.

A recent NBC News/Wall Street Journal poll found that 69 percent of Americans now believe that free trade agreements have cost America jobs.  Ten years ago the majority of Americans had great faith in the new “global economy” that we were all being merged into, but now the tide has turned.

So why have Americans lost faith in “free trade”?

Well, it turns out that the current system is neither “free trade” nor “fair trade”.  Many other nations impose extremely high tariffs on U.S. goods and put up ridiculous barriers to American products and yet the United States has generally let everyone else openly manipulate currency rates and flood our shores with whatever cheap products they want.

The results have been disastrous.  Jobs and factories have been leaving the United States at a blinding pace.

The United States has lost approximately 42,400 factories since 2001.  An economy without a manufacturing base does not have a bright long-term future.  Yet our politicians have allowed our manufacturing base to be systematically dismantled.

As of the end of 2009, less than 12 million Americans worked in manufacturing.  The last time that less than 12 million Americans were employed in manufacturing was in 1941.

How is the United States supposed to have a bright economic future if it consumes everything in sight and yet makes very little?

Something needs to be done.

In 1959, manufacturing represented 28 percent of all U.S. economic output.  In 2008, it represented only 11.5 percent and it continues to fall.

Needless to say, millions of blue collar workers now find themselves unable to find jobs.  Today, 28% of all U.S. households have at least one person that is looking for a full-time job and there is no sign that things are going to improve much any time soon.

Long-Term Trend #2: The Exploding U.S. Trade Deficit

Each month, tens of billions more dollars go out of the United States than come into it.  In other words, every single month the United States gets poorer.

Recently, the U.S. trade deficit has been coming in at around 40 to 50 billion dollars a month.  About half of that is with communist China.

Between 2000 and 2009, America’s trade deficit with China increased nearly 300 percent.

Sadly, things are getting even worse.

As of the end of July, the U.S. trade deficit with China had risen 18 percent compared to the same time period a year ago.

There is a reason why China has been able to loan the U.S. government nearly a trillion dollars.  They have literally been bleeding us dry.

The United States spends approximately $3.90 on Chinese goods for every $1 that the Chinese spend on goods from the United States.

Does that sound like “fair trade” to you?

According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.

Half a million jobs in just one year?

And that doesn’t even take into account the trade deficit that we have with all the other nations around the world.

We have literally built China into a superpower.

One prominent economist is now projecting that the Chinese economy will be three times larger than the U.S. economy by the year 2040.

But it isn’t just China that is a problem.

Since the implementation of NAFTA in 1994, 300,000 U.S. farms have gone out of business.

Globalism has forced U.S. workers to directly compete with the cheapest labor in the world for jobs.  That is not good for American workers and it is not good for America.

Long-Term Trend #3: The Shrinking Middle Class

As jobs continue to flee the United States and as wages continue to be depressed, America’s middle class is shrinking at an alarming rate.

According to a poll taken in 2009, 61 percent of Americans “always or usually” live paycheck to paycheck.  That was up substantially from 49 percent in 2008 and 43 percent in 2007.

Unfortunately, a growing number of Americans have found it impossible to make it from month to month without direct financial assistance from the federal government.

41 million Americans are now on food stamps.  One out of every six Americans is now enrolled in at least one anti-poverty program run by the federal government.  Economic pain is everywhere.

Tens of millions of Americans now live in poverty.  The U.S. Census Bureau says that 43.6 million Americans are now living in poverty and according to them that is the highest number of poor Americans that they have ever recorded in 51 years of record-keeping.

Long-Term Trend #4: The Growing Size Of The U.S. Government

No matter whether it is a Republican or a Democrat in the White House, the size of the U.S. government has continued to grow by leaps and bounds in recent years.

This is a tremendous drain on the U.S. economy.  The government produces very little value for the economy and yet costs a colossal amount to maintain.

In addition, multiplying government regulations have caused the United States to be a very difficult environment to operate a business in. 

The Federal Register is the main source of regulations for U.S. government agencies.  In 1936, the number of pages in the Federal Register was about 2,600.  Today, the Federal Register is over 80,000 pages long.

Long-Term Trend #5: The Constantly Growing U.S. National Debt

The United States has accumulated the biggest mountain of debt in the history of the world and every single month it gets worse.

According to an official U.S. Treasury Department report to Congress, the U.S. national debt will top $13.6 trillion this year and will climb to an estimated $19.6 trillion by 2015.

Do we really want to pass on a 20 trillion dollar debt to our children and grandchildren?

But the truth is that the situation is actually a lot worse than that.

If the U.S. government was forced to use GAAP accounting principles (like all publicly-traded corporations must), the U.S. government budget deficit would be somewhere in the neighborhood of $4 trillion to $5 trillion each and every year.

Needless to say, that is not anywhere close to sustainable.  We are literally destroying our economic future with all of this debt.

Long-Term Trend #6: The Ongoing Devaluation Of The U.S. Dollar

The Federal Reserve constantly destroys the value of the U.S. dollar.  Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.

An item that cost $20.00 in 1970 would cost you $112.35 today.  An item that cost $20.00 in 1913 would cost you $440.33 today.

Inflation is like a hidden tax.  The value of the dollars you are holding right now will decline a little bit more each and every month. 

And now that the Federal Reserve is threatening to unleash another round of quantitative easing, it appears that the value of our dollars will soon be declining even more rapidly.

Long-Term Trend #7: The Derivatives Bubble

The one thing that the “Wall Street reform bill” should have done was that it should have done something about the horrific abuses in the derivatives markets.  Instead, the Wall Street reform bill did next to nothing about derivatives and instead imposed hundreds of other useless regulations on Wall Street.

Most Americans don’t even know what derivatives are.  Basically, they are side bets.  They have no underlying value of their own.  But today derivatives have taken center stage on Wall Street.  Our financial markets have become a gigantic casino.

The total value of all derivatives worldwide is estimated to be somewhere between 600 trillion and 1.5 quadrillion dollars.  And thanks to the U.S. Congress, the derivatives bubble is still growing.

It would be hard to understate the danger that the derivatives bubble represents.  The danger from derivatives is so great that Warren Buffet once called them “financial weapons of mass destruction”.  

When the derivatives bubble finally pops, there will not be enough money in the entire world to fix it.

Long-Term Trend #8: The Health Care Industry

The United States health care system is completely and totally broken.  It has become a gigantic money making machine for health insurance companies, pharmaceutical corporations and greedy lawyers.

Americans pay more for health care than anyone else in the world and yet they get shockingly little in return.

Health care expenses are the number one reason why people file for personal bankrupty in the United States.  Surprisingly, most of those who get bankrupted by health care expenses actually have health insurance.

The health insurance system in the United States is a complete and total mess.  Health insurance premiums are busting the budgets of tens of millions of American families and yet they are getting ready to go up yet once again. 

Already, large numbers of health insurance companies across the United States have announced that they plan to increase health insurance premiums in response to the new health care law.

But do health insurance companies actually need more money?  Even as the rest of the U.S. economy deeply struggles, America’s health insurance companies increased their profits by 56 percent in 2009.

At least someone is doing well in this economy.

The truth is that the U.S. health care system needs to be totally and completely reinvented.  The system we had before did not work.  Barack Obama’s new health care system will be far worse.  Meanwhile, the health care industry is literally choking the life out of the U.S. economy.

Long-Term Trend #9: Financial Power Is Becoming Concentrated In Fewer And Fewer Hands

Once upon a time, the United States had a very diverse financial system.  But today financial power is becoming concentrated in fewer and fewer hands with each passing year.

More U.S. banks fail every single week.  In fact, the number of bank failures is on pace to far surpass the total of 140 U.S. banks that failed last year.

There are now nearly 900 banks (well over 10 percent of all U.S. banks) on the FDIC list of problem banks.

Meanwhile, the “too big to fail” banks continue to pick up market share.  The “big four” U.S. banks (Citigroup, JPMorgan Chase, Bank of America and Wells Fargo) had approximately 22 percent of all deposits in FDIC-insured institutions back in 2000.  As of June 30th of last year that figure was up to 39 percent.

Putting an increasing amount of financial power into the hands of just a few elite banks is a recipe for disaster any way you want to cut it.

Long-Term Trend #10: Rampant Corruption On Wall Street

Our financial system has become an absolute cesspool of corruption.  In the past I have written extensively about all of the corruption that Goldman Sachs has been involved in, but they are far from alone.

In fact, it seems like new stories of financial corruption emerge almost daily now.

For example, just recently Bank of America, JPMorgan Chase and GMAC Mortgage have all suspended foreclosures in many U.S. states due to serious concerns about foreclosure procedures.

But there is a lot of corruption that is a lot worse than that.  The rampant manipulation of the gold and silver markets was completely blown open by an industry insider earlier this year, but the U.S. government had to be publicly shamed before they would even agree to look into it. 

The truth is that corruption on Wall Street has become so common that it is almost impossible to keep up with it all.  It seems like no matter what stone you turn over on Wall Street these days you find yet more corruption.

But if the core of our financial system is so incredibly corrupt, how long will it be before it collapses in on itself?

Long-Term Trend #11: The Growing Retirement Crisis That Threatens To Bankrupt America

The Baby Boomers may end up bankrupting America after all.  A retirement tsunami is coming that threatens to drown our nation in a sea of red ink.

The truth is that Americans have not been preparing for retirement on their own.  One shocking new study indicates that Americans are $6.6 trillion short of what they need to retire comfortably.

In fact, approximately half of all workers in the United States have less than $2000 saved up for retirement.

So what about corporate pension plans?

Are they in good shape?

No.

One recent study found that America’s 100 largest corporate pension plans were underfunded by $217 billion as of the end of 2008.

But sadly, the pension plans run by U.S. state governments are in even worse shape.

Robert Novy-Marx of the University of Chicago and Joshua D. Rauh of Northwestern’s Kellogg School of Management recently calculated the combined pension liability of all 50 U.S. states.  What they found was that the 50 states are collectively facing $5.17 trillion in pension obligations, but they only have $1.94 trillion set aside in state pension funds.  That means that collectively, the 50 U.S. state governments are 3.2 trillion dollars short of what they need to meet their pension obligations.

But the biggest mess of all may be the U.S. Social Security system.

The sad reality is that anyone that has studied it closely knows that it is nothing more than a Ponzi scheme, and the scam has just about run its course.

According to the Congressional Budget Office, the Social Security system will pay out more in benefits than it receives in payroll taxes in 2010.  That was not supposed to happen until at least 2016.

Oops.

But things get really hairy when you start looking down the road.

The present value of projected scheduled benefits surpasses earmarked revenues for entitlement programs such as Social Security and Medicare by about 46 trillion dollars over the next 75 years.

Ouch.

It is time to face facts people.

We are in deep, deep, deep trouble.

An increasing number of Americans are starting to realize this.  They may not always know the specifics of what is going wrong, but more people than ever realize that something is broken.  According to one recent survey, 63 percent of Americans believe that the United States is on the wrong track.

And we are very much on the wrong track.  We have squandered the great wealth that our parents and grandparents left us and we are wrecking the greatest economic machine that the world has ever seen.

If we do not get our act together, someday people will look back and will curse this generation for how incredibly stupid we were.

The Economic Collapse