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Media and Politicians Ignore Oncoming Financial Crisis
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The mainstream media was too busy obsessing over Russiagate to notice that, according to an annual Social Security and Medicare Boards of Trustees report, the Social Security trust fund will run out of money by 2035. The trustees also reported that the Medicare Hospital Insurance trust fund will be empty by 2027.

The trustees’ report is actually optimistic. Social Security is completely funded, and Medicare is largely funded, by payroll taxes. Therefore, their revenue fluctuates depending on the employment rate. So, when unemployment inevitably increases, payroll tax revenue will decline, hastening Medicare and Social Security’s bankruptcy.

Another dark cloud on the government’s fiscal horizon involves the Pension Benefit Guaranty Corporation (PBGC), which provides federal bailouts to bankrupt pension plans. The PBGC currently has an over 50 billion dollars deficit. This deficit will almost certainly increase, as a number of large pension funds are likely to need a PBGC bailout in the next few years. Congress will likely bail out the PBGC to avoid facing the wrath of voters angry that Congress did not save their pensions.

Unfunded liabilities like Social Security and Medicare are not included in the official federal deficit. In fact, Congress raids the Social Security trust fund to increase spending and hide the deficit’s true size, while leaving the trust fund with worthless IOUs.

The media also ignored last week’s Congressional Budget Office (CBO) report predicting the federal debt will increase to an unsustainable 144 percent of the gross domestic product by 2049. The CBO’s report is optimistic as it assumes interest rates remain low, Congress refrains from creating new programs, and there are no major recessions.

Few in Congress or in the Trump administration are even talking about the coming fiscal tsunami, much less proposing the type of spending cuts necessary to pay down the debt and have the funds to unwind the entitlement programs without harming those currently reliant on them. Instead, both parties support increasing spending and debt.

Republican control of both houses of Congress and the While House led to increased federal spending of over $300 billion dollars. The House Democratic majority now wants even more spending increases. House Speaker Nancy Pelosi is threatening to not raise the debt ceiling unless President Trump and congressional Republicans agree to lift the spending caps put in place by the 2011 budget deal.

The Republican Congress routinely exceeded the caps’ minuscule spending limits. Therefore, Speaker Pelosi should have no problem getting President Trump and his Republic congressional allies to once again exceed the caps on welfare spending as long as Democrats agree, as they are likely to agree, to bust the caps on warfare spending.

America’s military budget already equals the combined budgets of the next seven highest-spending countries. Instead of allowing himself to be neoconned into wasting trillions on another Middle East quagmire, President Trump should bring home the nearly 170,000 troops stationed in almost 150 countries.

Unless Congress immediately begins making substantial spending cuts, America will soon face a major economic crisis. This crisis will likely involve the Federal Reserve’s debt monetization resulting in a rejection of the dollar’s world reserve currency status. Since the media and most politicians refuse to discuss this topic, it is up to those of us who understand the truth to spread the word, grow the liberty movement, and force politicians to make real cuts right now.

(Republished from The Ron Paul Institute by permission of author or representative)
 
• Category: Economics • Tags: American Military, Government Spending 
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  1. BADmejr says:

    Why would any average person worry about the federal deficit given the (seeming) lack of consequences for rampant debt while adding programs that benefit (some) Americans? Given there appears to be no stopping this train, the sooner it derails, the better. Let the crash come.

    • Replies: @alexander
  2. alexander says:

    The average person has never been “taxed” to pay for the tens of trillions we have spent on our illegal wars ….over the past 18 years

    The result is the greatest explosion of our National Debt …… in all of US History.

    1999 national debt- 5.6 trillion
    2019 national debt- 22.3 trillion*

    Our Corporate media, who conspired to defraud the American People into these illegal wars, is “loathe” to discuss the cost of the wars they lied us into….. on the evening news.

    “Loathe” to discuss it .

    This is why the heinous explosion of our National Debt is never mentioned in “prime time”.

    Even if the national debt is mentioned , it is done so without any context as to why it has grown so large, so fast.

    Our media has been utterly shameful in its deliberate deception(s) of the American People.

    I have never seen anything like it in my entire life (and I am 56)

    In reality ,the bulk of the burden of the cost of our wars has been forced on the shoulders of future generations of taxpayers.

    If our legislators were to tax the “average person”, up front, to pay for their illegal wars, the outrage would have been so massive and widespread , their wars of aggression could never have been started .

    So they opted to “steal” the money… from our children and grand children….who had no say in the matter.

    The “average person” has never been hit in the pocketbook for the trillions in illegal war spending going on….

    When you combine this with our Media’s total obfuscation of the actual cost of the wars they lied us into ….. you have the “perfect formula” for why the average person “doesn’t care” that much.

    If they knew the truth…each and everyone of them ,.. would be absolutely “bullsh#t”!

    *source: National Debt Clock

    • Replies: @Achmed E. Newman
  3. alexander says:
    @BADmejr

    Comment #2 is a response to your comment #1.

  4. My name is Ruin, my name is evil
    My name’s a war song, I’ll sing you a new war
    My name is Ruin, my name is broken
    My name is shameless, I’ll tear your world open

    From “My Name is Ruin”
    Album: “Savage (Songs From A Broken World)” Gary Numan 2017

  5. Whoever cuts spending and attempts to rein in the credit expansion will trigger a recession so deep that it will signal political suicide for himself and his Party. Richard Nixon understood this in 1971 when he closed the gold window and I doubt there are very many in DC who are unaware of this fact.

    No politician in Washington is going to fall on his sword with the guaranteed result that his political enemies will take control more thoroughly than FDR did in 1933.

    Spending will not be cut until after the Emergency and one group or another has consolidated power to an extent that allows them to act with impunity.

    • Replies: @Achmed E. Newman
  6. @alexander

    Our media has been utterly shameful in its deliberate deception(s) of the American People.

    I think you give the Lyin’ Press WAY too much credit, Alexander. It is not deception. It is pure stupidity. Just talk about numbers, as Ron Paul just wrote, or even just ONE number to a “journalist” and watch his eyes dilate and the drool start coming down one side of the chin.

    The people that deign to inform the American people are just plain stupid. Even if they weren’t’, it wouldn’t stop what’s coming, of course, and seekers of truth in matters financial ought to read Zerohedge* or maybe the Global Financial Stupidity topic key on Peak Stupidity.

    .

    * .. though, since branching out into politics more and more, it’s probably only 1 in 4 or 5 articles there that will get into the financial stupidity we have been experiencing.

  7. @another fred

    I’m out of [AGREE]s, but you are right, Fred. No one will take the fall, though perhaps Dr. Paul here would have, but gotten us on the right track out of it, had he gotten in office with about 200 other Constitutionalists in Congress (I’m dreaming, of course).

  8. Just a general comment:

    Since this is Ron Paul’s bread and butter, I’ve got no argument with his take here. OK, I’ll make an exception of

    … it is up to those of us who understand the truth to spread the word, grow the liberty movement, and force politicians to make real cuts right now.

    Bless you, Dr. Paul, as I know you try your best, but it is too late for that. Things will have to be figured out after Peak Stupidity (the financial crash). We can only hope and work for a future that does not turn Communistic. That’d be a long dark age coming …

  9. anon[267] • Disclaimer says:

    “the federal debt will increase to an unsustainable 144 percent of the gross domestic product by 2049. The CBO’s report is optimistic as it assumes interest rates remain low, Congress refrains from creating new programs, and there are no major recessions.”

    Things not accounted for here but what we know we’re getting after that democrat debate: unlimited immigration, open borders, unlimited war, healthcare for all people who cross the border, reparations – probably carbon taxes and increased fuel taxes / destruction of the coal industry just like Hillary publicly stated … maybe tax increases on the rich can cover some of it for a while. Can’t say I’m too sorry the Koch Brothers heirs will be paying more. They deserve it.

    • Replies: @Achmed E. Newman
  10. Unfortunately, Dr. Paul doesn’t address the real issues.
    – Social Security is in trouble because Congress changed the rules to allow it to be misused.
    – Medicare is in trouble because Big Pharma is gouging, and there is rampant fraud.
    – The wars have been primarily wars for Israel, which also sucks hundreds of billions in aid out of the US through Congressional malfeasance and dereliction of fiduciary responsibility.
    – Payroll taxes are down, because Congress has allowed off shoring of well paid jobs to foreign countries in Asia, which are thriving as a result.
    – The deficit is growing, because the inflated petrodollar ensures a higher cost and price for US made goods. If its true value were allowed, the cost of Chinese and Korean made goods would skyrocket, and no one would be buying them.
    – The banks are still withholding, despite court order, the trillions accumulated by Lee Wanta, that are to be turned over to the US Treasury, which would wipe out the debt, with trillions to spare.

    The problem is the political whores.

    • Replies: @Adam Smith
  11. @anon

    I see that you are accounting for a lot of things, Mr. Anon #267. As you seem to be a sort of blog-accountant, let me ask you a question: any wiggle room in there for giving every black person a few hundred thou for reparations. Maybe you can run your spreadsheet again, if it doesn’t work out the first time. ;-}

    I’m so sorry I could not find the exact clip I wanted, but Michael Scott represents the US of A here:

  12. alexander says:

    Dear Dr. Paul,

    OF COURSE they “ignore” the impending financial crisis.

    If you LIED the American people out of tens of trillions of their tax dollars to go fight illegal wars of aggression overseas …would you WANT to talk about the resulting financial crisis you LIES created ?

    I don’t think so!

  13. Ron Paul points to a future that few want to see, that will lead to ‘a rejection of the dollar’s world reserve currency status’. The challenge is to change the United States’ position a sole superpower without resulting in world war, which the pattern of history suggests will happen.
    https://www.ghostsofhistory.wordpress.com/

    • Replies: @alexander
  14. alexander says:
    @peter mcloughlin

    Hi Peter,

    The reason why the world is planning to reject the US dollar as the “reserve currency”, is because the US, under Neocon tutelage, has run up a massive 22 trillion dollar debt fighting illegal wars of aggression, all around the planet.

    This is considered by everyone else in the world, EXCEPT OUR NEOCON OLIGARCHS , as a supreme international crime.

    Nobody wants to continue to underwrite our debt (by using our currency) , if that debt is being generated from committing wanton acts of criminal wars of aggression.

    Who can blame them ?

  15. Nothing to worry about until…..
    Until foreign entities will stop buying US government issued securities.
    At that moment US financial system will collapse as house of cards.
    ……………………………………………………………………………………………
    But here is the surprise.
    Result of it will be that nobody will owe anything to anybody.

  16. Paul says:

    Ron, how about canceling the tax cuts for the rich if you really are worried?

    • Replies: @Achmed E. Newman
  17. Paul says:

    “So, when unemployment inevitably increases, payroll tax revenue will decline, hastening Medicare and Social Security’s bankruptcy.”

    These dire predictions, put forward by those who want entitlement cuts, conveniently ignore the increased revenue raised by normal economic growth and compounding.

    • Replies: @Achmed E. Newman
  18. Paul says:

    By the way, Ron, these programs cannot go bankrupt. The worst that could happen is that payments would have to be reduced.

    • Replies: @Achmed E. Newman
  19. @Curmudgeon

    This is the first time I’ve heard of Lee Wanta. Very interesting. Thank you.

  20. @Paul

    a) Ron Paul is no longer in the House o’ Representin’.
    b) If he still were, he’d still be for scrapping the entire income tax law, as in repealing Amendment XVI.
    c) The rich will always have loopholes, as, Paul, do you understand who WRITES the tax laws?
    d) The amount you are talking about is chump change compared to the $4,000,000,000,000 yearly Feral budget – lookey HERE.
    e) Dr. Paul has more economic wisdom in one pinky finger than you have in your brain, at least as evidenced by your comments here.

    • Replies: @Paul
  21. @Paul

    a) You can’t have real economic growth when your country doesn’t make Jack Squat anymore.
    b) What compounding? The FED must hold interest rates down in the basement, or else the stock market, containing pension plans’, 401k-holders’ and lots of others’ paper wealth, will implode. Additionally, if they let the rate rise to a natural, price-of-money rate of 6% or what-have-you, interest on the Federal debt would be 25 – 35% of the budget!

  22. @Paul

    Payments don’t even have to be reduced. Ron Paul understands the concept of FED-induced inflation as theft.

    Sure, old man, you’ll get the exact $1673.24 montly we promised you … uhhh, it’s not my fault that your rent is now $3,000 for a one-bedroom in the ghetto and a Happy Meal is $23.99.

  23. Paul says:
    @Achmed E. Newman

    “Ron Paul is no longer in the House o’ Representin’.”

    I did not say he was. Try to pay attention.

    “Dr. Paul has more economic wisdom in one pinky finger than you have in your brain, at least as evidenced by your comments here.”

    That would give him — despite his appalling ignorance — more wisdom than you if you even had a brain.

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