We're living longer and retiring earlier at one end of life while at the other end of life, we're staying in school longer and taking on heavy debt loads to do so. Meanwhile, in the middle too many of us have low paying part time jobs and are applying for and receiving questionable Social Security disability payments from the soon-to-be-out of money Social Security disability fund.
Of course, medical costs are now government 'controlled' and escalating at a much higher than inflation pace as we live longer and experience better but more costly health care treatment. And on top of that, Medicaid pays for most of the cost incurred for stay in our nation's extended care facilities for the elderly.
Meanwhile, we import much of what we buy as consumers and enjoy fewer high paying domestic jobs as a result.
All in all, we have a long term problem in need of a thoughtful long term solution. But thoughtful long term solutions aren't even being seriously discussed in our ongoing political circus called the 2016 national elections.
Instead the political discussion about the presidency is about Hillary's e-mails (not her character and lying about Benghazi as reported in She All Knew Along) and the walls with Mexico that 'The Donald' promises to build with Mexican money.
As a nation, we're 'officially' $18 trillion in debt. While that's admittedly a big number, it's not even in the ballpark of being close to the real American indebtedness. That streak of honesty, were it ever to appear, would add another several hundred trillion dollars to the debt pile.
For example, there's another $200 trillion or so in underfunded entitlement obligations for Social Security, Medicare, ObamaCare and unfunded pension obligations for various city, state and other public sector employees (including members of state legislatures and the U.S. congress, K-12 and college teachers, policemen and fire fighters), to mention just a few of the financial burdens we're putting on the backs of future American generations.
So how bad must it get before we start paying attention to reality? Maybe a quick look at what's happening in Brazil would be instructive as to where we're headed, given our political situation and unwillingness as citizens to tell it like it is and deal with our problems while there's ample time to do so.
An Exploding Pension Crisis Feeds Brazil's Political Turmoil tells the troubling story of Brazil, a country in both economic and political turmoil:
"SÃO PAULO, Brazil — When Rosângela Araújo turned 44, she decided that she had worked long enough.
“I had to take advantage of the benefit that was available to me,” said Ms. Araújo, now 65. Her government pension stands at about $1,000 a month, five times the minimum wage. . . .
Brazilians retire at an average age of 54, and some public servants, military officials and politicians manage to collect multiple pensions totaling well over $100,000 year. Then, once they die, loopholes enable their spouses or daughters to go on collecting the pensions for the rest of their lives, too.....
Brazilians retire at an average age of 54, and some public servants, military officials and politicians manage to collect multiple pensions totaling well over $100,000 year. Then, once they die, loopholes enable their spouses or daughters to go on collecting the pensions for the rest of their lives, too.....
“Think Greece, but on a crazier, more colossal scale,” said Paulo Tafner, an economist and a leading authority on Brazil’s pension system. “The entire country should be frightened to its core. The pensions Brazilians obtain and the ages at which they start receiving them are nothing less than scandalous.”. . . .
But a rebellious Congress voted this year to significantly expand pension benefits. . . . Officials had expected a major shortfall in 2030, but they now say that could happen as soon as next year.
Brazil is enduring its sharpest economic downturn in decades, hemorrhaging jobs and depleting contributions to the pension system. The Federal Revenue Service said such payments plunged 9 percent in August.
Then there is Brazil’s plummeting fertility rate — which recently dropped to 1.77 children per woman, below the rate needed for the population to replace itself — which will eventually put even more pressure on a pension system already under intense strain.
This shift partly reflects higher living standards in recent decades and broader availability of birth control, but it will result in fewer young people to support a much larger older population. As recently as 1980, Brazil’s fertility rate was 4.3 children per woman, according to the United Nations.
Then there is Brazil’s plummeting fertility rate — which recently dropped to 1.77 children per woman, below the rate needed for the population to replace itself — which will eventually put even more pressure on a pension system already under intense strain.
This shift partly reflects higher living standards in recent decades and broader availability of birth control, but it will result in fewer young people to support a much larger older population. As recently as 1980, Brazil’s fertility rate was 4.3 children per woman, according to the United Nations.
And the average life expectancy in Brazil has climbed to 74.9 years in 2013, from 62.5 years in 1980, according to government statistics. Instead of building a surplus now to prepare for an onslaught of new pension obligations, scholars say, Brazil is squandering a demographic bonus that will soon fade.
Economists note that Brazil already spends more than 10 percent of its gross domestic product on public pensions, similar to what southern European countries with much older populations have recently spent, according to the Organization for Economic Cooperation and Development. Unless changes are made, an even bigger shock is expected here, given that the population of people 60 or older is expected to reach about 14 percent of the overall population in just two decades, up from about 7 percent now.
But the biggest challenge that political leaders across the ideological spectrum face is one they helped create: the generosity of Brazilian pensions. . . .
The pension system can ease extreme poverty. For instance, rural workers can retire five years before others even if they have never contributed to the public pension system, receiving a monthly payment equal to the minimum wage, about $210 a month.
The pension system can ease extreme poverty. For instance, rural workers can retire five years before others even if they have never contributed to the public pension system, receiving a monthly payment equal to the minimum wage, about $210 a month.
But the system also perpetuates inequality by providing special benefits to hundreds of thousands of government employees and their families. . . .
With Rio’s pension obligations soaring, that means fewer resources for basic services like schools, hospitals, policing and sewage systems. Rio is planning to spend about $4.5 billion this year on pension benefits, compared with about $3.6 billion on the state’s public education and health systems, officials said.
With Rio’s pension obligations soaring, that means fewer resources for basic services like schools, hospitals, policing and sewage systems. Rio is planning to spend about $4.5 billion this year on pension benefits, compared with about $3.6 billion on the state’s public education and health systems, officials said.
“Brazil has three very clear options to prevent large increases in pension spending: Increase contributions, increase the retirement age, or decrease pensions,” said Mariano Bosch, a labor markets specialist at the Inter-American Development Bank. “All of those options are very unpopular.”. . .
So far, political leaders do not seem prepared to embrace any of those options. . . .
Well-organized pensioners’ unions are rejecting calls to scale back benefits. . . .
Well-organized pensioners’ unions are rejecting calls to scale back benefits. . . .
“Public pensions in Brazil have long been a slow-motion disaster,” said Raul Velloso, a specialist on public finances. “The difference now is that the debacle is accelerating, revealing to our children the political cowardice and irresponsibility our leaders are bestowing on them.”"
Summing Up
U.S. government spending continues to grow.
One huge and seemingly insoluble problem is that government promises for spending on education, retirement and health care costs are just that -- promises, albeit unfunded promises.
And those seriously underfunded promises will be paid by future generations.
Of course, we're not Brazil. At least not yet.
But don't hold your breath waiting for the politicians to begin a realistic and honest discussion about the problems and realistic solutions.
As the article says, the three options for entitlements are to (1) increase contributions, (2) raise the retirement age, or (3) decrease benefits.
The correct course of action would be to embrace all three options for entitlements, and then also implement a free choice individually controlled voucher system for education.
To fail to do so is to continue to penalize unfairly both current and future American generations.
And that's not fair.
That's my take.
Thanks. Bob.
U.S. government spending continues to grow.
One huge and seemingly insoluble problem is that government promises for spending on education, retirement and health care costs are just that -- promises, albeit unfunded promises.
And those seriously underfunded promises will be paid by future generations.
Of course, we're not Brazil. At least not yet.
But don't hold your breath waiting for the politicians to begin a realistic and honest discussion about the problems and realistic solutions.
As the article says, the three options for entitlements are to (1) increase contributions, (2) raise the retirement age, or (3) decrease benefits.
The correct course of action would be to embrace all three options for entitlements, and then also implement a free choice individually controlled voucher system for education.
To fail to do so is to continue to penalize unfairly both current and future American generations.
And that's not fair.
That's my take.
Thanks. Bob.
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