The federal retirement system's holdings are an important part of our purported deficit crisis just as are Social Security holdings.
A lot of that money is due to be paid out over the next 20-30 years as the people who put it in, the baby boomers retire.
What is more, that same pattern will be repeated on the stock market. Those turning 70 1/2 now and in the coming years will be required by law to take a percentage of money out of their 401(K) accounts and move it into accounts on which they pay taxes.
That will increase tax revenues slightly (or not at all depending on the incomes of the people taking the money out and how much they take out), but reduce the amount of money available for investment in Wall Street.
This baby boomer crisis was foreseeable. The Reagan administration tried to prepare for it with regard to Social Security. We were encouraged to save, but during the Bush administration many of us lost our jobs as we began to get older and our employers could hire younger people. Some in my age group borrowed a lot of money and lost their homes.
They are now sentenced to paying rent out of their Social Security the rest of their lives. A chained CPI will be dreadful for them because rents will rise but their incomes will not increase to make up for those increases. That will shift more people to the Section 8 roles.
The crux of the matter is that the government is not doing nearly enough to encourage good paying, good tax-revenue sources such as manufacturing jobs in the US. Our trade policy sounds idealistic but is in fact dreadful. It results in the outsourcing and exporting of jobs to other countries. Our young people are working as masseuses and selling junk at the malls instead of making the things that we need like socks and pants and farm machinery.
Until we wise up and change our trade policy to favor American workers, we will continue to face a fiscal cliff.
= new reply since forum marked as read
