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Authored by Mike Shedlock via MishTalk.com,

A San Francisco Fed report highlights concern over Congressional spending that’s out of control, Social Security, Medicare, and rising interest on the national debt.

The Long-Run Fiscal Outlook in the United States

Please consider a report on the Long-Run Fiscal Outlook in the United States by the San Francisco Fed.

Mish Synopsis

• The current setup is nothing like the situation following WWII. Don’t expect another baby boom.

• Instead, expect a massive wave of boomer retirements (already started) that will pressure Medicare and Social Security.

• Depending on the kindness of foreigners to increase demand for US treasuries is not exactly a great plan.

• Artificial Intelligence (AI) will undoubtedly increase productivity. But that is not going to offset the willingness of Congress to spend more and more money on wars, defense, foreign aid, child tax credits, free education, and other free money handouts, while trying to be the world’s policeman.

The Fed is right to be concerned. It tried to list a couple of ways the problem is lessened, but counting on AI to be the savior seems far fetched.

Trump vs Biden on Social Security and Medicare

Reuters reported Trump Warns U.S. House Republicans Not to Touch Social Security, Medicare

On December 4, 2023, WRAL News reported Biden Says Republicans plan to Cut Social Security by 13%

The Cost of Doing Nothing

Biden’s claim was based on a 2020 report that Trump did not embrace. Both Trump and Biden have stated they will not touch Social Security.

The Wall Street Journal comments on The Biden-Trump Plan to Cut Social Security.

Under existing law, doing nothing will result in automatic cuts of 23 percent based on CBO estimates.

But presidents cannot think past the current election cycle. It’s debatable if Biden can think at all.

Rosy Estimates

The CBO Estimates are too rosy. No one has bothered to factor in a recession as far as the eye can see.

Even without a recession, payroll data tells one story and employment another.

Nonfarm payrolls and employment levels from the BLS, chart by Mish.

For discussion, please see Jobs Soar but Full Time Employment Is Barely Changed Since May 2022

Even if there is no recession, where will the payroll tax receipts come from to support the promised payments?

Do the calculation again with a recession.

Meanwhile, both Trump and Biden propose doing nothing.