It's not the 2010s anymore.
It all comes back to housing. Lower housing costs, give daycare support, and productivity will be boosted and fertility rates increased.
I'm a millennial in the northeast and people here wait to have kids until their mid 30s because daycare and housing is so expensive , so they want to feel financially secure before parenthood. It's a rational decision with bad implications for society.
Housing is literally a silver bullet for so many of the US' issues it's a bit weird it's only ever discussed at a local level. I believe other countries like Japan have national zoning laws and agencies to deal with those conflicts.
How about we finally require the wealthy to pay their fair share of taxes including upping the income level for Soc Sec taxes? How about we let these immigrants work and also allow them to work towards citizenship. Every immigrant or refugee who is allowed to have a job also pays into Soc Sec. Why are low tax rates for the wealthy still allowed and the working class are the only ones considered for tax hikes?
But where is a political consensus to do austerity remotely visible? Prior to Reagan a clear consensus to balance the budget existed. Since Reagan's great innovation- unfunded tax cuts, the Republican party has feasted on its positioning as the lower taxation party. Meanwhile, no one (excepting unelected pundits) appears willing to cut entitlements (SS, Medicare). The Dems always have a plethora of also unfunded ideas for their priorities. And then there is defense which as you mention probably will cost more not less going forward. It seems the deficits will continue to grow UNLESS taxes go up or entitlements get adjusted (i.e. cut versus status quo). Yet again neither "solution" appears remotely feasible.
1. No more tax ceiling for Social Security
2. Simplify tax code, closing loopholes for wealthy.
3. Medicare for All (which cuts Medicaid, ACA, maybe Workman's Comp and Auto insurance medicals, plus hundreds of other healthcare programs at county, state, and federal levels. So many inefficiencies between private insurance, govt., pharma and medical care. Republicans should like that this actually reduces government.
4. Nos. 2 and 3 will free up a lot of workers that are needed for more important stuff like infrastructure, manufacturing, etc. This is what investors should be focused on instead of buying up housing and student loans to parasitize our citizens.
Interesting that there isn't more of a push for skilled immigration as a solve for the replacement rate issues. Seems like "hey, I know you're scared of 'cultural changes' but these scary immigrants are going to pay your social security and Medicare" might even appeal the the MAGA crowd. And then after we deal with the broken skilled immigration system we will probably have better tools to deal with migration from the Northern Triangle...
Rarely comment but can I suggest, if you don’t already, follow Lyn Alden regarding inflation
In the 1940s, inflation was fiscal-driven and public debt was high. In the 1970s, inflation was mostly lending-driven and public debt was low. Currently, the Fed is using a 1970s-style playbook to deal with 1940s-style fiscal-driven inflation.
Today, the ratio of government debt to GDP has returned to 100 percent. And Lyn Alden points out that repression—keeping interest rates below the inflation rate—is likely to be the case now, just as it was in the 1940s. But there is an important difference.
I tend to agree with the prognosis that true austerity won't happen due to:
1. rising populist tendencies, very difficult to control
2. the perception that the ultra-rich are to blame for everything (right or wrong)
3. US-China tensions mean that, like an AI pause, austerity just isn't super likely to happen
"Aging means entitlements don’t pay for themselves anymore."
Financing consumption in "retirement" and heath insurance for older people with a tax on wages was never a sensible idea. Such thinks should be financed with a VAT that is adjusted from time to time to keep that component in rough fiscal balance; it should never have made net deficits in the rest of the budget easier or harder. [It is entirely consistent with expenditures passing non-negative NPV tests and, given expenditures, revenues large enough to minimize deficits.]
This is why it's so important to get the Democratic trifecta back in 2024. Taxes are never, ever, ever increased without a trifecta.
I say start with super-high alcohol taxes and treating capital gains like earned income, but there are any number of other options.
"MMT has no useful advice in this situation" is a reply without content
"child benefits don't seem to raise birth rates"
In countries where it is harder to make a living for yourself and your family, brth rates go down. Italy which is religious but where making a living is hard and welfare low and unequality between genders is high, birth rate is lower than in Sweden where the facts are the opposite. but in Sweden too birthrates are lower after 5 decades of austerity politics.
When a government like that of the USA has the ability to create its own currency, it has the power to determine interest rates as it sees fit. This concept lies at the core of Stephanie Kelton's book, 'The Deficit Myth.' Kelton argues that governments with sovereign currencies, such as the U.S. federal government, have the capacity to control interest rates on their own debt issuance.
She explains that such governments do not need to rely on external lenders to finance their budget deficits because they can create their own currency. Consequently, the government can effectively set interest rates on its own debt issuance and use this power to achieve its economic goals, such as managing unemployment and fostering economic growth.
Fundamentally, Kelton emphasizes that the budget deficit itself is not the primary economic concern; rather, it's how these resources are used to promote societal welfare and economic stability. Her book challenges conventional wisdom regarding government finances and advocates for a different perspective on the government's role in the economy, rooted in modern monetary theory (MMT).
Addressing the issue of an aging population can be tackled through various means. To increase birth rates and counter the demographic challenge, the government may consider the following measures:
Increased Child Benefits:
Introducing or enhancing child benefits can provide financial support to families, making it more affordable to have children. This can encourage more couples to start families and thereby increase the number of young people in the population.
Enhanced Welfare for Ordinary Citizens:
Investing in a robust welfare system that includes education, healthcare, and social support can alleviate the economic burdens on families. When people feel they can afford to have children and that their children will receive quality education and healthcare, it can incentivize family formation.
Implementing a balanced and responsible immigration policy can attract immigrants who can contribute to economic growth and the workforce. Immigrants can also fill labor gaps and bolster the economy.
Promoting efficient integration of immigrants can help them enter the job market more quickly and contribute to the economy. Immigrants can take on jobs at various skill levels and fill various professional roles, thereby creating more job opportunities for both immigrants and native citizens.
In summary, a combination of measures, including increased child benefits, a sustainable immigration policy, expanded welfare programs, and effective integration, can help mitigate the effects of an aging population and promote a healthy demographic development alongside economic growth. Collaborative efforts are crucial in creating a societal and economic environment where people feel empowered to build their families and contribute to a vibrant and dynamic nation.
But aren’t we a rich country? The richest ever to exist. How rich are we exactly? How much wealth does our country have? Are we taxing that wealth at all?
From there, how much of our country’s riches are held by a very few? How does that stat go 1% owns...?
Do we need new cellphones every year and other crap from Walmart or Amazon. Market consolidation(now basically market monopolies) along side super low taxes on the monopoly corps and wealthy, and dumb wars for profits are the true culprits. Perhaps we need to ask, does the market really meet the needs of people? We’re so rich we have homeless, so rich we have hungry families, so rich grandma skipped her meds again. Guess our people aren’t economically productive enough.
Austerity never works in the long run and always looks pretty convincingly foolish in hindsight. It’s a bad idea that never seems to die.
Rather, I see it as we need to continue to ask whether our money is going in the right places?
An ex. - Can we build a next century military without giving a blank check to military contractors that were privatized decades ago? Not too mention, so much now days is done by contractors instead of the government itself for every part of the government. Just putting tax dollars back into the undeserving fat cats.
Raising the retirement age so people just die before they get there is a broken social contract promise. The anti new deal/great society is so old hat. We continue as a country pulling the ladder up and out of the hands of young people so the rich can live lavishly.
In one breath, you say we should be a more egalitarian country, and in the other you’re like austerity for the masses. So which is it? Can it be both? How much does the average American have at retirement? I doubt it’s that much and may end up trying to survive on ss, medicare/Medicaid.
Don’t put the blame or responsibility of fiscal mismanagement on the reg folk. It’s because of mismanagement at the top.
Let me see if I understand: Democrat austerity good. Republican austerity bad. Democrat inflation good. Republican inflation bad. Democrat deficits good. Republican deficits bad. How'd I do?
> whether the interest rate r is less than economic growth r
"economic growth g"?
> programs like Social Security and Medicare are like sustainable Ponzi schemes
But Ponzi schemes are unsustainable by definition. A Ponzi scheme in which the base of in-payers is growing is just called a Ponzi scheme. A scheme which can keep paying out over the long term without needing to grow its customer base is an investment. The fact that a Ponzi scheme hasn't yet collapsed doesn't mean we need to qualify it with adjectives.
What you're saying here is that these are and always have been just ordinary Ponzi schemes.
> The last 15 years pushed us to imagine what more the U.S. government could do if only it had the political will to open its purse-strings.
But that's happened, and now we know what was delivered with ultra-high money printing. Was it worth it? I don't think so. Remember that the "crises" that were used to justify huge deficits were themselves engineered by governments! The 2008 financial crisis was created by US policies towards home lending. COVID was created in a lab built by the French and at least partly funded by the US. Lockdowns were an unnecessarily extreme response created in bug filled models by corrupt academics, all of whom were being funded by deficit spending.
That's what we all got for years of deficits: ever more extreme swings of the pendulum trying to solve today's problems that were caused by yesterday's solutions. And now for our troubles, a bankrupt social security system.
We badly need "austerity", or as it's called when not being discussed by the left, sustainable government. What we don't need is arguments of the form "we've printed lots of money via roundabout means, so now interest rates are low, so now is the time to spend lots of money". This sort of obfuscation is beloved of technocrats because it hides what they're doing, and they especially love to present interest rates as if they are some sort of weather event that must be exploited for maximum benefit, like going outside on a sunny day. Versus the more mundane reality that outside of hyperinflation, they're controlled by the government itself.
Austerity -- the zombie idea that simply will not die. For the sake of all that is holy, don't walk, RUN and get a copy of Mark Blyth's "Austerity: The History of a Dangerous Idea."
Good grief ...
Why does Social Security and Medicare have to be "paid for," but the F-35 and V-22 (and everything else at the DOD) don't? The US spends more on "defense" than the next X countries combined, but no one ever questions that budget going up and up and up.
PS: Uncap FICA!