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Either we sacrifice or the future generation suffers

Either we sacrifice or the future generation suffers

Virtually every economist and most politicians understand that the American economy is heading for a crash – a very big depression-era crash.  Of course, they do not say it that way.  Instead, they say that government expenditures are “unsustainable.”  That is a euphemism for the fact that the economic poop is going to hit the fan at some time in the future.  Same say as early as the mid-2030s.  They are not meaning a recession, but a 1929-style Depression, or worse.

The very real prospect of an economic catastrophe is the reason why we expect to see the future generation living to a lower standard than their ancestors – us. That is not an unwarranted fear, but virtually a certainty.  Some say that the malaise that psychologists and psychiatrists say afflicts the younger generation is the realization that they will not have it as good as mom and dad.

Former U.S. Comptroller General David Walker is among those sounding the alarm. He believes that the folks in Washington are spending more than we can afford to satisfy every desire.  As if that isn’t already obvious to the average taxpayer.

There are two 500-pound gorillas in the room – Social Security and Medicare.  Although other issues – such as general welfare and social spending — play roles. 

There are only two ways to keep those programs afloat and expanding – taxation and borrowing – and both are reaching their limits.  The only solution is to cut spending.

This problem has been building since the end of World War II, when the “greatest generation” came home to become the “greediest generation.”  World War II Americans have consumed more financial resources and more natural resources than any generation in the history of the world – more than they could pay.  Borrowing compensated for the things even taxation could not cover.  The greediest generation took every benefit they could and stuck their kids and grandkids with the bill. 

The war-babies and the boomers turned to the government to provide the best of everything regardless of the cost.  Their elected officials went on a spending orgy on their behalf.  The greediest generation kept electing politicians who would use the federal treasury to satisfy both their needs and desires. 

They wanted to get paid for not working through unemployment compensation, dubious workman’s compensation, early retirement, and a range of welfare programs.   Consequently, we have the highest percentage of non-producing consumers in American history.  According to census figures, only 63 percent of ELIGIBLE workers are working. 

In 1950, each Social Security retiree was supported by financial contributions to the system of 16 workers.  Today, each beneficiary is being supported by only 2 workers.  And in 1950, no one was on Medicare – nor were the welfare benefits as generous.   Welfare (charity) was basically a local issue.

As the so-called entitlements portion of the federal budget exploded, the ability to pay for them lagged behind – ergo the exponential growth in deficit spending covered increases in annual deficit spending –and by a growth in the National Debt.  Currently, the Biden administration is adding $2.4 trillion to the National Debt each year.  But the end of 2023, the National Debt reached $34 trillion.

Many, like Walker, believe that we have already passed the tipping point.  We can no longer head off an economic disaster in the future but merely mitigate the severity.  And that is ONLY if we take drastic action now.

Unfortunately, the economic and political realities are juxtaposed.  The future disaster is worsened by those who say that Social Security and Medicare are untouchable.  The responsible politicians are those demanding real cuts in federal spending, taxing and borrowing.  Unfortunately, the conservatives who push for cuts in spending – and point out the absolute need to cut suture social spending, including Social Security and Medicare — are demonized by progressives and the media as heatless extremists.

If we do not reduce government spending, the economy will eventually crash.  But politics works against those who see the need to reform and to readjust the entitlements programs to change the out-of-control trajectory.  Greedy voters will not hear of it.  They will continue to elect those who promise to keep the gravy train rolling.

The most noble moments in American history were when the people were willing to sacrifice for a greater cause.  We saw that in the Great Depression and two World Wars.  The question is whether we the people will recognize the disaster we are bestowing on our children and grandchildren and be willing to sacrifice.  If not, they will suffer.

So, there ‘tis.

About The Author

Larry Horist

So,there‘tis… The opinions, perspectives and analyses of Larry Horist Larry Horist is a businessman, conservative writer and political strategist with an extensive background in economics and public policy. Clients of his consulting firm have included such conservative icons as Steve Forbes and Milton Friedman. He has served as a consultant to the Nixon White House and travelled the country as a spokesman for President Reagan’s economic reforms. He has testified as an expert witness before numerous legislative bodies, including the U. S. Congress. Horist has lectured and taught courses at numerous colleges and universities, including Harvard, Northwestern, DePaul universities, Hope College and his alma mater, Knox College. He has been a guest on hundreds of public affairs talk shows, and hosted his own program, “Chicago In Sight,” on WIND radio. Horist was a one-time candidate for mayor of Chicago and served as Executive Director of the City Club of Chicago, where he led a successful two-year campaign to save the historic Chicago Theatre from the wrecking ball. An award-winning debater, his insightful and sometimes controversial commentaries appear frequently on the editorial pages of newspapers across the nation. He is praised by readers for his style, substance and sense of humor. According to one reader, Horist is the “new Charles Krauthammer.” He is actively semi-retired in Boca Raton, Florida where he devotes his time to writing. So, there ‘tis is Horist’s signature sign off.

10 Comments

  1. FRANK STETSON

    While I find this financial salad to be totally tossed mixing all sorts of different economic vegetables together as if all the same, I do agree we need to spend less. Horist does not think we need more revenues, I say we need that as well. Plus we need to reclaim tax dollars from cheats, not defund the ability to do so, profitably too.

    “Virtually every economist and most politicians understand that the American economy is heading for a crash – a very big depression-era crash” I am pretty sure is an unprovable piece of hogwash Horist invented. I have looked and while many feel a recession is possible in 2024, you know, the one from 2023, and I agree, it’s a strong possibility, I can not find virtually every economist calling it a crash as Horist has apparently found. Much less a crash that would make you feel good about being in a Depression.

    All I can say is: even Florida, Mr. Horist?

    • larry Horist

      FRank Stetson … You are so tiresomely ignorant. It seems your obsessive desire to constantly attack me makes you stupid. You really could not find ANYTHING about the future dangers to the economy of a major crash. Did you look beyond the dusty corner of your brain? The Internet is filled with economist prediction’s or warnings. Here are s few.

      https://blog.itreconomics.com/blog/what-will-world-look-like-after-2030s-great-depression
      https://www.nasdaq.com/articles/gold-forecast-fiscal-crisis-and-the-next-great-depression-by-2030
      https://www.heraldtribune.com/story/business/2022/12/26/a-debt-fueled-financial-collapse-by-2030-the-futurist/69734814007/
      https://www.greatgame.com/blog/the-2030s-great-depression
      https://www.youtube.com/watch?v=i4eNrzc1Cmw

      And this is just a few from a one question search — and any reader can find more. Obviously, you were not interested in finding the facts behind my commentary. That is typical. There are so many stories on the Net that I have to assume that you are lying about what you found — or lying about doing the research.

      So much for typically snarky, sarcastic and untrue statement, “I am pretty sure is an unprovable piece of hogwash Horist invented.” I comment based on facts and experience. It is you who invents … like the imaginary Larry Horist of your mind. LOL

      Now, do not get your hope up. This does not change my general practice of ignoring your attacks and ignorance. Just thought it was time for readers to see one example of what a bullshitter you are.

      • FRANK STETSON

        Attack, yeah, sure. Feel the burn, not. Thanks for responding, appreciated as I have not seen the news about the 2030 global recession. I am sorry the salad concept got you down but you tossed discretionary, entitlement, trust funded, tax funded, etc. into your grab bag. I hope to explain more as I trudge through but am ever hopeful you will discuss more, demean less, and the links are a great improvement. Thanks. Certainly, though your statement that virtually every economist is calling this shot is hyperbolic spin given your response. I searched based on your statement. Come on man, just say —- little ahead of the ole headlights on that opening.

        In regards to your links:

        ITR is two bro’s, economists for hire, ex-govt worker on healthcare component of cpi. His bio mentions no education, awards, or other jobs….. but he will speak for money. Lots of money.

        The second link relies on ITR forecast, quotes a rich guy who uses Soro’s investing method and supports Christie. I think Horist tossed a ringer :>)

        The third one, written end of 22, calls for global recession in 2023, do I need to read more? The author has very smart parents that he includes in his bio, weird, grew up in Hyde Park and private school with a BA from Syracuse in an unknown discipline, he is profiled in a coffee table book, but must be a parental disappointment. I did like the piece though. Like ITR, he is available for speaking engagements……

        The fourth one is ITR again although this time they announce they have been calling this shot since 2014.

        Not close to “virtually every economist.” Matter of fact, there is not a top economist amongst them.

        Horist, I would have no issue with the concept that if we keep spending like this, we are doomed. And we are already late to compensate. And it is on our kids, I will be fine or dead. But I questioned your lead. I truly appreciate the effort, but your response did not prove the point. Right? Now that I know you are taking 2030 depression, that gives me something to check out. My PC kept working after 2000 you know… But my product’s clock ran out after 1999 and that really hurt to fix :>)

        Keep not reading, no issues at all. Thanks for reminding me though..

  2. FRANK STETSON

    There are levels and types of economic crisis, a recession is one, a crash is another. But these are nothing, an understatement at best, if foreign investors leave, the dollar crashes, we can’t pay our debt, and then our money is useless.

    It’s Greece without a safety net; there is no one to help us. Now that’s a crash.

    We are spending too much, IMO.

    Just an overview: for the most part, what can be addressed readily in our spending is discretionary spending of which Medicare and Social Security fall outside off, so I will discuss those and other tax-based entitlements in another long-winded tome, but rest assured, Horist does not even have a clue how they are structured. Mixing discretionary with entitlements is just bad accounting. Makes for good spin though.

    I also find it humorous that Hoirst side-steps the problem blaming the greedy generation. Just plain-speak it, you and I are part of that generation. It’s us that put our children in this situation. It started with Reagan and everyone since has lent a hand.

    Some history: I look at the issue as determined by the debt/gdp ratio. It is a metric on your ability to pay the freight of borrowing which is one way we print money. Or it’s your ability to borrow, sort of like saying you can afford 1/2 of salary for rent. After WWII, we crashed though the 100% gdp/debt factor on war debt hitting 121%. For over 35, years, the greatest generation, while adding many discretionary social programs, as well as fixed entitlements, brought down the ratio to an appropriate factor, about 30%. And then with Reagan, we began running it up, all parties, culminating with Trump going nuclear and blowing it out of the water. Trump was well on his way before covid. He mis-estimated the profit or gdp growth on the tax cuts and failed to deliver the tax revenues to pay for the cuts while he continued spending like a drunken sailor on shore leave. In 2020, Trump hit over 132%; 100% is considered the danger point, although no one really knows and, obviously 100 is not it. Biden brought it down to 120% in 2021 and has basically flat-lined out through 2023. Right direction but not fast or deep enough.

    Why? Debt/gdp sort of shows how viable you are for investment. The fear is that investors, especially foreign, will go elsewhere in which case the crash Horist alludes to is a nit: it will be cataclysmic like Greece but without any backup support — we just totally crash, all our money is no good. Far worse than any depression. Ever. Hear me when I note that a collapse of the dollar may not be recoverable and your guns will only save you for a short while. It’s that bad. Societal collapse bad.

    But, like I said, no one knows when investors will flee and, tween you and me, I am pretty sure we will not even see it coming. One day, great, next day it’s over. It’s really dangerous stuff. But here’s the thing, our economy, it’s based on “in God we trust,” and there is no better investment than the US, and that has held us in stay for now. We cruised through the 100% during Obama, he got scared by investors and pulled us back until Trump. No one knows when trust in America for investment goes away, but right now, where else are they going to invest: China? Maybe. Russia, no way. Saudi’s, England, Germany, maybe, but we pay better and with less risk. BUT —– we don’t need to totally fix it today, but we do need to do more of what Biden is doing, and that is to continue to trim the sails, rein it in and start what will be a decades-long process to fix it. We need to show commitment to bringing the metric lower. And the new goal will be higher than the 30% Reagan started from but far lower than current 120%. Big time.

    Making it simple, an economist once told me: imagine that you could give a Chinese guy some green paper and he would give you a new car. It’s just paper, but you have a car. And the only place he can ultimately redeem that paper is by giving it back to you for something you have/make. Pretty good deal as long as the Chinese guys wants the paper, I will take the car every day. And he might give the paper to someone else if he can get a better deal but ultimately the buck must stop here. It’s when he no longer accepts the green paper, when no one wants your green paper, that you have a real problem. Cuz now you just have paper, no car, and nothing to do with the paper.

    SO, what to do — it’s discretionary spending we can readily effect, so we need to show discretion and stop some of that. The biggest component is defense and if you can’t tell me we can’t get 10% off as a no-brainer, government is not an efficient spender. We should use a scalpel to take cuts on everything and if Congress could do their job, they would have such a proposal. As far as I am concerned, we can just hit it with a 10% cut across the board which is not as good as a scalpel, but is easier to get Congress to do. Just whack the entire discretionary budget.

    IMO, you can even budget freeze or balanced budget for x years or until gdp/debt ratio hits an interim selected target: start with 90% for example.

    Second, and Horist notes it but for some strange reason, does not recommend it, we need increased revenues starting by taxing the rich who pay at the lowest rates in history, far lower than most sovereign nations and wind-up owning mores US assets than ever before. Then roll back some of the Trump tax cuts. The did not work, did not return the profits to cover the costs as Trump estimated. Or he lied. But all of our rates should be raised, at least a bit. They are too low. Lastly, and this one galls me, re-fund the IRS to get back taxes from cheats. It’s profitable, proper, and I don’t have a clue as to why the law and odder Republicans stand against it. Like they live in Hazard with the Dukes and the revenooers are coming. They are cheats, get their cheating profits back.

    Next, I will move to entitlements, a whole nuther kettle of phish.

    • larry Horist

      Frank Stetson … You continually establish that you are not an economist. That is why you have no idea the mechanics of the economy. You are stuck with your contrarian politically — not factually — founded opinions. You spend too much time using a lot of words to compensate for the lack of credible content. And the only objective that is apparent is your obsessive desire to criticize moi. As I have said before, you need to get Larry Horist — the real AND your straw man imitation — out of your head — and focus on the issues..

      • FRANK STETSON

        Did I say something factual wrong? Beyond calling me names and alleging my generic shortcomings, I see nothing specific to rate your ire.

  3. AC

    Who is schooling whom in the comments above?
    Depends. Which of the two track true?
    In America’s best interest and pay back on investment already made, we, the American people, anxiously wait for a leader of a sound mind and unimpeachable ethical judgement.
    It appears, the candidate making the most noise and furry is succumbing to his own protestations and legal woes in his on camera meltdowns. A few minor gaffs may be excused, but mental gear slippage on a grand scale should not be over looked.
    Sure, both apparent candidates must be held to the same strict standard. Neither should receive any passes for their lack of vitality in mind and, so too, judgement.
    We’re late in the election season game for changes.
    However, the stakes in this game are great and partisan bickering must be the first out of all sacrifices Horist is suggesting. Compromise in today’s me vs them attitude is synonymous with capitulation and weakness.
    Not so, there is strength in two and more opposing opinions agreeing to disagree and sacrifices made.
    Our nation is at a crossroads pivoting point. A fact that is compounded by our 2024 election. In that, our President, whomever we elect, will determine our country’s future viability as the world’s leading power.
    I would not be surprise if many of those financial benefits many of us receive from the government are on the table and discussed. It is an inevitability for large ticket budget items will land on the hit list.
    Rightly or wrongly, which of the candidates wind the contest depends on one’s perspective, but who that the majority elects as the next POTUS is consequential and determinative for our future and our nation’s.
    Larry, take a sane intelligent nonpartisan comparative assessment of the assumed candidates for this country’s top job. Then, tell us who should lead this nation for four years. (Presumption of truth, the whole truth applies)
    IMO the above task is unfair for you. Your party loyalty disallows your satisfying all the prerequisite conditions.
    Your answer is obvious given party loyalty. Then party over country begs an altogether deeper question.
    As we all must wrestle with that same question. What does our answer reveal about me, you, the electorate, and America? We are as insane and lost to reality as is our party’s candidate. You are what you find agreeable in the person you vote for.
    And that ain’t pretty in either party’s case.

    Do, that’s, that.

    decisions which could produce decades lasting expensive consequences.

    .

  4. FRANK STETSON

    Horist tosses discretionary budget items and entitlements together as if one and the same. They are not. One is normal budgetary stuff, the other, by law. They both result in spending tax dollars, but they are very different beasts spending very different tax dollars. Medicare and Social Security are the big entitlements, they are also similar but very different in structure.

    Entitlements are government-provided or government-managed benefit/services as mandated by law. The Entitlement Budget (EB) is created by law, not a budget process. Discretionary spending is formally approved by Congress and the President each year. Discretionary is relatively simply changed by a terribly-defined process yearly. Entitlements can changed any time but can only be changed by law as in the entire, cumbersome, tedious, Congressional/Executive process to make law.

    About 66% entitlement, 33% discretionary from our budget. I discussed discretionary suggesting a meat-cleaver approach of xx% reduction, across the board OR even a short-term zero-balance budget until gdp/debt ratio hits a target metric.

    For entitlements, Social Security is over 38% of EB. Medicare/Medicaid about 42% of the EB, welfare about 20%. Unemployment fluctuates from 2% in good years, to 15% in covid years. Horist is right that SS and Medicare are the big gorillas but leaves out the unique accounting structure that is way different from any other US budget item. For example, by design, SS can never cause a deficit. They are similar in the fact that both are paid-for by special payroll taxes, not income tax. Income tax pays for all discretionary budget items. However, Medicare is also paid out of income taxes too making it an ugly step child of funding, it’s a clusterfuck of laws resulting in some very bad accounting practices and will be very hard to clean up.

    SS, frankly the easy one, since it is so transparent. While it may be more practicality than genius planning, SS is a marvel of accounting. It had to be based on taxes to be Constitutional, as are many entitlements (like Obamacare) but turned out that’s just brilliant. I think if the founding fathers saw it, they would be impressed at the financial architectural beauty of this arcane budgeting as complex yet simple as our three-branch government structure. And they would probably pat each other on the back saying: “I did that!” Gives CPA’s woodies.

    SS is funded by a payroll tax and all funds are dedicated to SS. SS can never take funds from the General Fund by law. The government, beyond the basic investment into T-bills, can’t touch the fund. By law. It’s a beautiful thing. It’s our base level retirement account, it the biggest investor in our debt, it’s basically self-sufficient, and for you illegal alien haters, any that pay in, never get any back so illegals fund us as well.

    The funds are invested in special t-bills, redeemable at any time, and with special rates. Unique. Again, by law. Gives me chills. Together, via Social Security, we own about 40% of the national debt, we are our own biggest investor and backer of our own debt. That’s just freakin brilliant and only sovereign nation accounting could pull this off. Can’t mortgage your house like that, but we mortgaged our country to ourselves —- that’s just so cool, financially speaking that is.
    SS is spending more than it takes in and the trust fund will go belly up in 2034 as in spending more than it takes in and depleting the funds already there. However, it’s still not broke then and still can pay 80% of its obligations every year. Because of the accounting structure, the potential fixes stare you in the face, it’s simple math, even Horist can see them :>)
    – More revenue (take more tax, remove salary limits, etc.)

    – Less benefits (older age to get bene’s, mean’s testing, etc.)
    – Some of each
    – Do nothing, it will be in deficit, and you will be passing new laws to steal from the General Fund affecting the entire budget.

    The math is uber easy. Even economics-challenged Horist can do it. On his abacus. We will need 20% more money or 20% less benefits or some portion of each, in between. Do it now because each year we get closer to 2034, that number will go higher. It’s easily fixable, but the longer we wait, the bigger the hit.

    There’s no mystery here as to the fund depletion. We live longer (at least until Trump’s covid response), less workers than boomers paying in. The massive covid deaths amongst the elderly will lessen the effect, but the fund will be depleted. But the answer is relatively simple, the horse trading minimal, we have modified it before, let’s just do it. Due to length, will pick up with Medicare next, not a pretty picture. But the bottom line: with the current structure, SS cannot cause debt, cannot cause a deficit.

  5. FRANK STETSON

    Medicare is a Horist of another color, red ink. It’s a clusterfuck of a budgeting nightmare with some parts paid via payroll, other parts from the general fund from income taxes and therefore not cutaway from discretionary spending like SS. When SS goes bankrupt, you have to stop and fix it, it smacks you upside the head and everyone can see it. When Medicare runs over costs, we just pull more money from the General Fund, cry about the deficit in general, borrow some more cash from China, and move on without noticing much or where it came from. It’s belly up already IMO and always running deficits which we just cover from the general fund. The payroll part, which creates a trust like SS, goes broke in 2028, tomorrow, basically.

    This fund is totally fucked up, accounting wise, as created by Johnson with changes by others over the years and never fixed, never done right. Costs are increasing, membership rising, it’s just totally out of control. It’s the 800lb gorilla on the table and our largest entitlement spending issue, by far as is defense to discretionary spending. IMO, the entire funding architecture needs to be like SS, cutaway, unable to tap the General Fund, self-sustaining, and therefore, fixes will be easier, transparent like in SS. Until then, it’s just a morass that is sinking us and we barely notice as we yell about nits like unemployment insurance and even welfare.

  6. FRANK STETSON

    Bottom line:

    Discretionary funding is the fastest to cut; defense is the big one, but across the board reductions are viable too.
    Entitlements take longer, SS is a big one but it’s special accounting make it easy to figure out. SS, by law, cannot add to our deficit. Medicare can, and does run deficits. It is bigger and a total clusterfuck of accounting that our current Congress can’t get close to a consensus or even a clue how to pass law to fix. That’s the 800lb gorilla.

    IOW: the big fixes should be defense, trim those discretionary budget sails, and Medicare – make it function like Social Security – cutaway, self-sufficient, transparent, by law, and impossible, by law, to run a deficit from the General Fund. And Horist is right — the end solution requires cuts in discretionary and entitlements, it’s just the process is very different and the priorities too. But he leaves out that we need a revenue improvement, targeted, as I have noted above.

    The target should be the gdp/debt ratio to first bring below 100 and then bring below 50 as my recommended initial targets. This ratio tells you your ability to borrow, to pay, based on the nation’s production. Like your home, if we work harder, make more product, then of course we can afford a bigger loan. But today, we have to rein it in, we are borrowing too much, and it’s not a recession, or even a depression we should worry about, it’s the collapse of the dollar.