A common Fox News pundit statement… What does that mean exactly? Future generations will earn a wage, page a portion of tax from it, and pay it forward. Just like you and I are doing right now. What will be different for future generations in regards to the bankruptcy they will, allegedly, face?
Well, I’m sure the werewolf congress will take the necessary steps.
The problem is, the higher the national debt, the more money that has to go into paying the interest on that debt, which means that in the future, taxes will have to be raised and spending cut to make the payments. So, by continuing to act irresponsibly when it comes to spending, we’re setting ourselves up for a problem in the future.
Maybe in the Doom Bunker.
What will be different is that our children ( and grandchildren, likely )will have to pay off the debt we amassed, without using the resources we’ve squandered, and while dealing with the problems we’ve neglected. That’s one reason I have none.
Of course, Fox being what they are aren’t going to admit that the hole we are in was mostly dug by the Republicans.
So says everyone on the Ponzi pyramid - unless you happen to be the ones holding the check at the end.
The generation currently in grade school (i.e. my daughter) is going to have a hell of a time of it. They’re going to inherit a Social Security system that can’t pay enough without taxing them. They’ll inherit gross under-funding of various government pensions, and they’ll inherit a huge debt load created by us. They’re going to watch as a big bulge in the population leaves the productive workforce and begins to demand ever-increasing benefits for the elderly.
None of this is imaginary. These are real debts and real costs that have to be for with real money. Money that our kids would have liked to have spent on vacations and nice homes just like we did. But it’ll be taxed away to pay back the money we borrowed to live the good life.
Surely then, those of us paying the majority of taxes now, must be paying for past debts and resources the previous generation squandered? I mean, isn’t this whole system one large ponzi scheme? We’re paying into SS and medicare right now with no immediate benefit for the current generation of retirees. Your daughter will pay for your SS and medicare, and her children (or generation after that) will pay for her SS and medicare. On the surface America really is one large Primerica scheme. Tell all your friends and family to sign up!
Ok, so basically its a given future generations may pay higher taxes, that doesn’t equal bankrupt though. Left with little is better than bankruptcy. Higher taxes will leave you with little. Not that I’m for that or anything. Just trying to debunk this ‘bankruptcy’ assertion by the pundits.
You seem to be under the impression that this has been happening for generations and each successive generation just passed it on to the next - therefore we can just pass it on indefinitely.
But running absurdly high deficits year after year is a pretty recent thing in US history. We ran very high deficits in WW2 for obvious reasons - but the generation that fought that war ended up sucking it up, facing higher taxes and less services to pay off that debt, and basically paid it off.
The debt took off again in the 80s under Reagan. By the mid-90s the growth had started to level off but the Bush era saw the debt rising at record pace. We’re in uncharted territory in terms of US history. Already a sizable fraction of our government’s budget goes to paying interest on the debt. Our kids and grand kids can’t just keep passing it on - eventually, if we don’t take our medicine and do something drastic, or undergo a catastrophic economic change devaluing our debt through hyperinflation or something, then the amount of government budget going to paying off the interest on the debt - not even the debt itself - will crowd out other government spending.
ETA: http://upload.wikimedia.org/wikipedia/en/3/3b/USDebt.png
Yes, that is the impression I’m under. If the debt has existed without ever getting paid down to zero, then we’ve been playing hot potato with it since it derived. Like buying a computer on your credit card, and the balance never getting down to zero, you’re still paying interest on that computer 10 years later, assuming you kept the debt that long. Of course that’s individual debt, but the 2 billion dollars in public debt? Am I, we, still paying a fraction of principal and interest on some dusty ass war tanks somewhere from the 40’s? I think we are.
It depends on how you look at it. If you take the $2 billion from WWII, borrow another $2 billion and then pay off $2 billion, what portion was paid off? I guess you could assign it in such a way to say we are still paying on WWII equipment, or it could be assigned so that all that old debt is paid off.
I tend to agree with the gloom and doom. Who out there has the will to cut this budget? It used to be that the GOP was always there, tried and true, ready to lead with the chainsaw. But they had their chance and became just as bad as the Dems. That will hurt deficit hawks forever.
The fact that we have a 1.75 trillion dollar deficit this year and that most people just shrug and say that it is needed because of the current economic situation is astounding.
What is real money?
Both parties are equally to blame as both parties tend to spend more than they have. Republicans spend it on the Pentagon while Democrats spend it on services.
Our children aren’t going to experience significantly higher taxes. How much would you work if you were taxed %100? And the government will continue to need to make interest payments on the debt so the whole system doesn’t just come crashing down. So essentially they will be just printing money. So what is going to happen is there will be less money for social services and other programs. The value of the dollar will decrease and you will see a rise in inflation. So in other words, what you will have is a real decrease in our children’s standard of living. They may not be able to afford college so our work force will become less educated. Kids will be living at home longer and getting married later. They may work longer hours for less return. They won’t be able to retire.
Since when have the Republicans ever “been there with the chainsaw” ? Consistently, at least since Reagan THEY’VE been the big spenders, the ones that pumped up the deficit.
No. The Democrats tax and spend - which is a major function of the government, not the evil the Republicans like to claim. The Republicans on the other hand spend even more, do so more wastefully and slash taxes. They’ve been the ones that pumped the deficit up and up, tore down all the regulations they could, did their best to ignore and encourage corporate misconduct, and on and on. The Democrats are hardly blameless, but the lion’s share of the blame is due to the Republicans.
Since we aren’t taxed anywhere near 100% that’s meaningless. Americans are taxed rather low compared to many other Western countries. Our children will indeed pay more taxes, because the money has to come from somewhere.
Not really. A Ponzi scheme recruits new investors and uses their up-front money to pay off old investors, giving the people who got in early high profits, directly off new people who are likely encouraged by seeing what the old investors got. Now here’s the key to a Ponzi scheme - there’s no actual investment. Ponzi claimed to be making money of the differential between international postage rates/stamps or some such, but wasn’t even buying any.
What the government is doing is borrowing money and investing it in relief programs for banks, unemployment benefits, road projects, and volcano monitoring equipment. Many people hope the investment pays off, but it is actually being made.
It is entirely possible that the government is borrowing too much money, and that this could turn out to be a very bad thing. But it is not a Ponzi scheme.
Even Social Security, which is often compared to a Ponzi scheme, is not a Ponzi scheme. The government tells you up front that it takes your taxes, pays current recipients with them, and uses the rest to buy T-bills to save up for future retirees. No promises of profit, no investment other than T-bills, and no fraud. In fact, there is a public debate about what will have to be done to retirement ages or benefits in the 2040s.
None of this stops the Punditti from making accusations that ignore the idea that “Ponzi” actually has a meaning. 
Social Security is a Ponzi scheme. It takes tax money from current earners and pays it to current recipients.
The excess in tax receipts is used to by government notes. But a government note is simply a promise by the government to pay back the noteholder at some future date. It is not a true earning asset like farmland, or factory equipment, or even a true store of value like gold or a barrel of oil.
The way the government pays its obligations at the time the note comes due is by…taxing the citizens at that point in future time, or borrowing again to roll over the debt.
Hence, it is a Ponzi scheme.
It’s not a Ponzi scheme if you tell everyone what you’re doing. It’s just a straightforward transfer of wealth from working-age people to retirees.
OK, but only if you are making the distinction that a ‘Ponzi scheme’ is a voluntary investment, and a government-imposed, forced contribution is…whatever you want to call it.
I would willingly opt-out of SS and take care of myself at retirement. The government could keep the six figures-plus it has already taken from me in FICA taxes over the past 20+ years as a gift. It wouldn’t need to pay me anything at retirement. But it would have to stop taking any more of my money.
Do you think the government would take that deal? It should want to take that deal in a heartbeat, don’t you think? They should come out waayyyy ahead if the excess SS tax receipts were truly being invested in earning assets.
Try and conduct a little thought experiment. Assume everyone who is contributing to SS, like me, wanted the same deal. We all would willingly forgo all of the contributions we have made to date. The government would owe us nothing at retirement. But the contributions from current SS taxes would stop as a result. Net-net, the government should love that deal, right? They would just pay off current retirees with the ‘assets’ they have bought over the years, right?
What do you think would happen? The system would collapse. Ergo, it’s a Ponzi scheme. One enforced at gunpoint. But a Ponzi scheme, nonetheless.
That is not the definition of a Ponzi scheme. Check the wikipedia article I linked.
The only way Social Security would be a Ponzi scheme is if it told you it was investing all your taxes in T-Bills for profits to pay off recipients, but then did not buy the T-Bills. Is it your contention that Social Security is not buying the T-Bills it says it’s buying?
:dubious:
No. I am not contending that. I am contending that ‘buying a T-Bill’ is simply re-aging a promise for the government to pay back the noteholder by…taxing the citizens at that point in time, or rolling over the debt. It is not a true earning asset.
What are you ‘dubious’ about? What can I try to explain better?
Red herring. The Social Security Administration can only take deals provided for in laws passed by Congress. They couldn’t take your deal whether they wanted to or not.
Look, we get that you don’t like Social Security. That’s not really what this thread is about. Just because you don’t like something, doesn’t make it a Ponzi scheme. Similarly, just because someone doesn’t like Obama, doesn’t make him a Communist.
You can explain your use of the No True Scotsman Fallacy to redefine Treasury Bills as not true earning assets. They earn, but due to your personal idiosyncracies, they don’t truly earn.