Just as the economies of Japan, France, Germany, Italy and Russia are rapidly being jeopardized by a shrinking working population and aging seniors dependent on government programs, so to is America's economy. But we have more time to do something about it, which is still not much.
The Federal Reserve Chairman warned us again of the danger, remember the doom and gloom of the impending social security crisis, well that is still there, and it's just the tip of the iceberg:
"Unfortunately, economic growth alone is unlikely to solve the nation's impending fiscal problems," Bernanke told the Senate Budget Committee.The chairman essentially argued that raising taxes and/or cuts in spending may help. But the core of the issue is demographics. Remember those pyramid charts in school showing the population percentage by age groups, with the young being the wide foundation and the old the small peak on top. Well, today the foundation is shrinking, and that top is getting larger and consequently heavier.
Bernanke acknowledged that official projections suggest the U.S. budget deficit could stabilize or shrink in the next few years, but cautioned: "We are experiencing what seems likely to be the calm before the storm."
Left unchecked, the costs of so-called entitlement programs, such as
Social Security and Medicare, are set to soar as increasing numbers of the baby boom generation retire.
"Dealing with the resulting fiscal strains will pose difficult choices for the Congress, the administration, and the American people," Bernanke said.
"However, if early and meaningful action is not taken, the U.S. economy could be seriously weakened, with future generations bearing much of the cost," he added.
Our problem is that Americans increasingly are having less kids, which is only offset by immigration, much of which is illegal. We need to encourage families to be families -have kids, and fix the immigration problem so it fits our needs, rather than gambling with open and uncontrolled borders.