US Deficit (1)
A looming disaster that we as a nation are going to face very soon is the deficit that has been build over the last decade or so.
What’s deficit?
Hey, if you are spending every month more than what you are earning, you know what would happen – there is a clear need to borrow from someone and that’s because there is a difference between your earnings and expenditure.
This difference is called the deficit, and just like it applies to an individual like you or me, it also is applicable to US as a nation.
So, how has all this happened?
Let’s have a quick look at the reasons that lead to this state of heavy deficit.
Years back when Social Securities were introduced, people felt happy that their financial issues after retiring from employment are being taken care of.
Those who worked contributed a part of their earnings to a fund that is to be used to pay out to those who have retired.
As the number of those who worked were more than those who retired, the inflow of amount into the fund grew, and very soon a substantial amount of deposits were created.
It’s then that the government decided to borrow these funds and take care of the expenditures like medicare, healthcare, etc.
This practice continued, and over the last couple of years, we have eroded all the surplus amount we had in the fund.
Come the year 2012, and we have all the baby boomers retiring.
The number of such retirees is going to be huge as most of them have been employed at almost the same time, and this is going to result in the requirement for more funds to put out the social securities to them.
Now, do we really have all that money in the social securities fund?
No, that’s what we said earlier, the government has been borrowing out all those amounts and using for other expenditures.
So, very soon, the requirement of funds needed by the government to meet these expenditures is going to be much, much more than the actual funds available with the government – this difference is the DEFICIT we are talking about.
So, is there a way to address this deficit?
It’s time for us all to now start doing something about this, otherwise very soon, we as a nation that has been known to be a super economic power will have to face undesirable consequences.
To be continued….
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Tags: Banking Crisis, Corney's Model, Financial Crisis, Geithner, IRS, Stimulus Bill, Taxes
