US economy: a financial ticking bomb
IN ISSUE No.106, Lynn Walsh ends his article on the
US economy by writing that "the system faces a future of economic crisis
and political upheaval".
Indeed, there is a financial ticking bomb in the
changing demographics of the US population. Basically, 7.7 million US
citizens will turn 65 between 2011 and 2030. Each one on retirement is
set to receive more than $30,000 in state pension and medical benefits.
By the time they are all retired the US will have doubled the size of
its elderly population but it will have only increased the number of
tax-paying workers by 15%.
As a result over the next 20 years the likely future
expenses of the US government will exceed tax receipts by a gigantic $63
trillion or five years output of the US economy. To square the circle
income tax would have to rise by 70% or benefits paid under the state
pension scheme – social security – and the Medicare health programme
would have to be halved.
The USA is the world’s biggest debtor and it cannot
continue for ever borrowing dollars from foreigners. Soon the US working
class have to move en masse on to the stage of history or they will end
up paying for the coming crisis of capitalism.
Alan Turner
Leeds
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