The debt problem will continue to grow. When the government overspends, which has been going on for about 75 years, its problems are passed on to us in the form of more or higher taxes and reduced benefits. The government’s solution is simple. When businesses overspend or their costs increase because of material costs, government regulation, increase in corporate taxes, labor, etc., the increases are passed on to us in the form of higher prices. Their solution is simple as well.

When families overspend or their costs increase, the solution is not so simple. The only way to absorb these increases is to reduce their standard of living and spend less money, or go deeper into debt. This is a lose-lose situation. If they spend less, it stifles the economy. If they go deeper into debt, the debt alone will stifle growth and personal savings and a new cycle is created. The government, seeing less revenue coming in because of less spending, seeks new ways (i.e. fees, taxes, regulations) to increase its revenue flow, which is, directly or indirectly, passed on to the public. All of this creates more transfers of our wealth now, and increased transfers in the future. This is a certainty!

Along with shifting age demographics, the government itself plays a role in diminishing our future wealth. Over the last 30 years, the only thing the government has done consistently is overspend the amount of money it has taken in. The government’s central focus has become collecting revenues, a/k/a taxes. The government is very good at it, but the financial burdens are passed on to us. We are expected to follow the 47,000 pages of tax law under the threat of penalty or imprisonment. Another problem is that, in 3,000 days, there will be fewer workers to pay for the government’s increases in spending, along with the cost of social programs. This will leave an enormous cost burden for the workers to pay, along with the challenge of trying to improve their own standard of living. Diminishing benefits and increasing costs will leave no one satisfied. To survive, the government will have to raise taxes.

-Leonard Renier