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Is America Becoming European or Japanese? Debt, Spending, Taxes and the Future.

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Presentation on theme: "Is America Becoming European or Japanese? Debt, Spending, Taxes and the Future."— Presentation transcript:

1 Is America Becoming European or Japanese? Debt, Spending, Taxes and the Future

2 Where Does the $ Go?

3 National Debt Almost Tripled from 2000 to 2011

4 Up, Up and Away

5 Government Buys Its Own Debt

6 Behind Japan, But Past Most Euros

7 Where Is the Big Growth? Government Spending as % GDP

8 The Boomers Are Getting Old and “Entitlement” Benefits Are Growing

9 The Big 3: SS, Medicare & Medicaid

10 Government Spending on Medicare (Age 65+) (Double these numbers to add in Medicaid & SSI)

11 So Many Injured and Hungry Americans!

12 Can’t Get a Job? Become Disabled

13 How agencies claim their spending is beneficial — the “multiplier” effect (USDA quotes): “SNAP [Food Stamps] brings Federal dollars into communities in the form of benefits … redeemed by SNAP participants at local stores. These benefits ripple throughout the economies of the community, State, and Nation. For example: Every $5 in new SNAP benefits generates a total of $9.20 in community spending. Every additional dollar's worth of SNAP benefits generates 17 to 47 cents of new spending on food. On average, $1 billion of retail food demand by SNAP recipients generates 3,300 farm jobs. If the … participation rate rose 5 percentage points, 1.9 million more low-income people would have an additional $1.3 billion in benefits per year to use to purchase healthy food and $2.5 billion total in new economic activity would be generated nationwide.”

14 If price and quantity demand are not tied together— people will demand a lot.

15 Americans Love to Go to the Doctor— Especially When Someone Else Pays

16 Governments Do Not Use Accurate Accounting So Many Looming Liabilities Are Undercounted

17 More and More People Get Government Money

18 U.S. on the verge of going European— entitlements for more and more

19 What Happens When Reality Hits and Goodies Have to Be Reduced? Ask the Greeks, Spanish…

20 Can’t Control Government Finances? Indonesia, with 1/10 th U.S. Income, has.

21 Taxes Are Progressive: High Income People Pay Most

22 Ever Increasing “Progressivity” of the Federal Income Tax System

23 Contrary to political talk, U.S. tax system is more “progressive” than most other countries. What happens if tax “the rich” more?

24 Who Pays Federal Income Taxes?

25 If You Pay No Federal Income Taxes, They Seem Like a Good Idea

26 Tax the Rich Less, They Pay More

27 States That Tax “the Rich” Lose Them

28 The Recession Is Worse Than Advertised: The Labor Market Is Moribund

29 Employment Has Not Recovered

30 The Recession Did Not End as Advertised for Households—Income Down 6.7% Since Ended

31 Profits are OK now—why no expansion?

32 Sales, Profit Margin, Profit Rate, Tax Rate (2011, 2 nd quarter) (Oil co. pay U.S. average rate of 40% Exxon$125,486$10,8988.68%41.47% Shell$124,562$8,7597.03%41.19% Chevron$68,948$7,76011.25%41.24% BP$103,848$5,6205.41%35.10% ConocoPhillips$65,627$3,4025.18%44.91% Totals ($) / Avg. (%)$488,471$36,4397.46%40.80% Big 8 - Q2 1011 Apple$28,570$7,31025.59%23.46% Microsoft$17,370$5,87033.79%7.05% IBM$26,666$3,66313.74%25.03% Intel$12,847$3,16024.60%27.71% Google$9,030$2,50027.69%18.83% HP$31,632$2,3047.28%20.33% Cisco$10,866$1,80716.63%16.81% Dell$15,017$9456.29%19.23% Totals ($)/Avg. (%)$151,998$27,55925.08%19.81%

33 Does Government Create Wealth?

34 Consumption Is Fine; Investment Is Not

35 The U.S. Labor Market Looks More European Than Ever

36 Work is hard to find. Government benefits are not.

37 My Guess SS will not incur major changes; it can scrape by with a little fiddling. Medicare (and other health entitlements) are the biggest problem; politicians are loathe to touch them—old folks vote and the number is rising fast. So federal debt will keep rising, not as fast. Like Japan, we can take on more debt if inflation stays low and people work; the horror is put off for years. If we become more European—more benefits, more state planning with big companies industry, we will never have good growth rates. Competition is relative—you just have to beat the other guy, not be the best.

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