We're on the Precipice of an Economic Crisis–and Everyone Knows It's Coming

It doesn't matter how much you want the government to help the poor, the old, or the otherwise needy. If you don't have a budget in place that makes that realistic then bad things are going to happen.

One of the biggest problems is Social Security. The money that you and perhaps whoever you work for put into it in the form of payroll taxes is essentially supposed to be a retirement savings account. In a way it is but the way the government "invests" it is disastrous. This money is used to purchase treasury bonds which are effectively IOUs. The money itself is then spent as part of the government's general fund. This works ok as long as more is taken in in payroll taxes then is paid out in Social Security benefits. That's been true for a long time but is starting to change as the Baby Boomer generation retires.

The problem is that none of our elective representatives want to solve the problem, they just want to kick the can down the road instead.

Heck, even folks on the left recognize that there’s a problem. Paul Krugman correctly notes that America is facing a massive demographic shift that will lead to much higher levels of spending. And he admits that entitlement spending is driving the budget further into the red. That’s a welcome acknowledgment of reality.

Source: We're on the Precipice of an Economic Crisis–and Everyone Knows It's Coming - Foundation for Economic Education