|SocialismToday Socialist Party magazine|
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.