With the presidential race ending tomorrow, many people in the country are hoping that whatever the outcome, the nation’s fortunes will improve slightly as a new direction is clarified, and Americans can either celebrate, or resign themselves to at least knowing where the U.S. is headed for the next four years.
But a major issue remains that no matter who wins the election tomorrow, the American economy is in major trouble for a variety of reasons.
Even before President Obama took office, the nation’s debt was a gargantuan $10.6 trillion. Instead of reducing this amount through prudent spending and increased revenue generation, Obama has nearly doubled it, increasing it to an unheard-of $19.4 trillion as of August of this year.
This unprecedented figure — greater than the debt of all previous U.S. presidential administrations combined — seems poised only to rise unless massive changes are made to how the country spends and brings in money.
Currently, the government’s biggest cost is paying for benefit programs such as Social Security and disability insurance. Recent presidents like George W. Bush and Obama have acknowledged the scale of the problem and have proposed to cut the amounts of benefits, but this hasn’t been acceptable politically.
Even George W. Bush’s idea to create “voluntary investment accounts” for Social Security met with a stinging rebuke from voters and from Congress. This year, GOP candidate Donald Trump and Democrat Hillary Clinton have both said that they won’t make cuts to these crucial programs (while each accused the other of lying about the issue).
But the fact of the matter is that something is going to have to be done about all the programs that fall under the aegis of the Social Security Administration because several of them — disability insurance and Medicare in particular — will face funding shortfalls as early as 2018 if no systemic changes are made.
Social Security itself will be insolvent as early as 2033 without major changes. Because of the massive wave of retiring Baby Boomers that aren’t accompanied by a respective increase in higher-earning young people, the government will need new revenue from some source to continue paying for the Boomers’ benefits.
It’s easy to say that all of this is the result of too many income gains in recent years going into the hands of too few individuals (read: the top 1 percent), but merely coming to that conclusion doesn’t offer a solution to the issue.
Not only will the government need more revenue in the future, but the present economy in general is not as rosy as the administration of Barack Obama would have you believe.
The government has claimed that more people are working since the depths of the most recent recession caused by the financial crisis of 2008, but the reality is that too many new jobs have been created in the service sector (read: waiters and bartenders), with wages that are too low. Median income levels are still below those of 2007 — the year before Obama took office.
Less income for most people means less spending and hence, less growth. Indeed, under Obama, the U.S. economy didn’t experience even one year of three percent or more growth in the last decade — an embarrassing first for a postwar president. All of the hoopla over transgender bathrooms and videos of dancing to Uptown Funk in the White House won’t change that.
People are deeply unhappy, and they have a right to be — unless you’re a member of society’s elite class, you’ve likely been seeing less and less of your paycheck — if you even have one — available for discretionary spending for years now.
Making things worse is the government’s spending money like it’s water for more than a decade, with foreign conflicts in Iraq, Afghanistan, Libya, Syria, Somalia, Yemen and Ukraine taking trillions out of our economy and ending young American lives.
And throughout much of this time, the government has been printing extra money via what it calls Quantitative Easing (QE) — a strategy that’s reduced the value of each dollar while it attempts to put a ceiling on our debt and fool the world into thinking the U.S. is as wealthy as it was in the past.
The problem?
It’s not working, and with each passing month, the global economy is sinking further and further toward recession — or worse. Barring some magic solution appearing over the fiscal horizon, foreign troubles such as Brexit and European banking woes threaten to create new crises that could quickly spill over into American markets and exacerbate our already awful predicament.
When we hear of literal pallets of cash being flown straight to our sworn enemies, such as Iran, in unmarked cargo planes while our children are dying on the streets of our cities like Chicago, Americans’ blood naturally begins to boil. Whoever the next president is, they’re surely going to have to preside over the handing out of economic pain to quarters that are still to be determined.
It’s going to be one big game of musical chairs, and depending on who gets into office, it could be your seat that gets taken away in the government’s quest to solve its quandaries. All the dances with Disney characters in the White House aren’t going to clear up the nation’s economic woes, and to pretend the country isn’t mired in a serious financial mess is akin to burying one’s head ten feet in the ground.
Regards,
Ethan Warrick
Editor
Wealth Authority
