The role of the government will impact everyone’s financial future.  The approach the government uses when it is faced with a problem has been to simply spend more money on the problem to fix it.  The government is a big believer in feeding the problem, not solving the problem.  The cost of government and its programs continues to escalate.  The pace at which the government is growing surpasses the cost of inflation and the growth of the average American’s income.  The government continues to avoid the challenges and tough choices that need to be made.  Politicians continue to offer “free” government programs in exchange for votes with no personal liability for the cost of these programs.  It is important to shed some light on the problems and challenges the government faces and how they will impact you personally, financially and our

The Battle for Our Future

The challenges of the Federal Government go beyond political party lines.  The accumulation of political mistakes, corruption and greed over the years has decayed our country.  Simply blaming one side or another is another form of FEEDING THE PROBLEM, NOT SOLVING THE PROBLEM.  We must also recognize that there are individuals in our country that would be happy if the country collapsed in order to fulfill their agenda.  Here are some of the Unsolved Mysteries that our country and government are facing and the financial impact it will have on you.

A Declining Workforce

According to the Government Accountability Office, the U.S. workforce will be declining over the next 25 years due to demographic (age) shifts in the population.  A declining workforce will create a decline in tax revenue to the government and an increase in the number of people on government programs.  All of this will occur while the cost of government continues to rise.  Remember, the government’s main source of revenue is taxes.  Knowing this, do you believe taxes will be higher or lower in the future?  Without increasing tax revenue, the only other choice the government would have to reduce costs would be to reduce or eliminate the benefits from their programs.

Public Impact

Not only is the workforce shrinking in the U.S, but also 47% of this workforce are zero-liability income taxpayers, meaning they pay virtually no federal income tax.  This leaves an even smaller percentage of the workforce to pay for the government and its programs.  Politically, politicians churning up class warfare and blaming the other side creates tension.  Blaming is easy and cheap and is usually used by those who have nothing intelligent to say.  A declining workforce could result in higher taxes, a declining lifestyle, and an inability to save by the average American.

An Aging Population

According to the latest census in the United States, people are living longer.  In the next 10 years, one of the largest demographic shifts will occur.  More people will be retiring.  When they retire, they will receive or have been promised more and more government benefits, which will be paid for by a smaller and declining workforce.

Public Impact

With longer life expectancies, retirees, in some cases, are experiencing the problem of outliving their retirement savings.  More people are relying on more government benefits for much longer periods of time.  The cost of government health care has now been put on the political table.  It is my concern that at some point, for the sake of cost containment, someone other than myself or my family will determine life’s medical decisions.  The cost of all government programs continues to soar, and the government has done nothing but throw more money at the problem.

Government Spending

Over the past few years, the government has experienced a decline in revenue from collecting taxes.  Several elements in the economy have caused this decline in their tax revenue.  This alone would be a cause for concern, but in the same time frame of declining revenue, the government has almost tripled its spending.  Not long ago, during the Cold War, Russia spent themselves out of existence.  I fear that on our current path, America also will spend itself out of existence……soon.

Public Impact

The only way to offset increasing government costs is to raise taxes and/or decrease benefits.  Either way you slice the pie, people will be upset, and it may change your life.

Unsustainable Government Debt

Over the past several years, the Federal Government’s spending has surged 52% faster than inflation.  Government debt has outpaced the growth of the American workforce and its ability to pay down the government debt.  The Federal Government’s debt is growing so rapidly it is impossible to quote the current figure.  As I write this sentence, the interest on the government’s debt is almost 50 million dollars an hour.  To learn the current debt of the U.S. government, go to www.usdebtclock.org.  You will see that our national debt is over 17 trillion. Plus, Social Security, Prescription Drugs and Medicare are underfunded by over $127 trillion and there is approximately ten thousand “Baby Boomers” signing up for these benefits daily. For some reason, the Federal Government is experiencing this debt at a time when there is a declining workforce, an aging population and an average household that has an inability to save.

Public Impact

Increasing taxes government regulation, declining government benefits, increasing prices on consumer goods, inflation and declining lifestyle for the average American can be expected.  Increasing interest rates on the government debt will stifle growth even further.

Unemployment

Unemployment on the surface impacts the ability to gain revenue through taxing income.  Below the surface, it also increases government spending by paying out unemployment benefits.  An even deeper problem is that the pricing for all government programs and the government’s ability to pay for these programs assume a national unemployment rate of over 7%.

Public Impact

Anyone experiencing unemployment in a down economy may face unpleasant consequences. Unemployment can destroy lifestyles, families, and marriages.  Debt and bankruptcies rates are extremely high.  Recovering financially from these challenges, as a country and personally, will take a long time.

Declining Housing Values

State and local government rely on property taxes as a source of revenue for schools, education, administrative costs, and infrastructure projects.  The drop in housing values is contributing to cities and states struggling to remain fiscally solvent.

Public Impact

Due to declining home values, revenue for community services (police, fire, EMS, etc.) is running dry. School programs could decline.  Cutting the size of local and state programs could decline.  Cutting the size of local and state government is a challenge in itself.

Declining Value of the Dollar

The cost of government programs continues to soar.  The government solution to this problem is to increase the number of government workers, to create more regulations (TAXES) and to simply print more money.  Every dollar printed by the Federal Reserve is debt to the Federal Government.  The amount of U.S. dollars in circulation has almost doubled in the last few years without doubling productivity or revenue for anyone.  Printing more money does not increase the value of money.

Public Impact

The falling value of the dollar impacts every purchase the public makes.  The declining dollar makes every household item more expensive and decreases the value and buying power of future dollars that everyone is saving for retirement.  The declining value of the dollar will create lower standards of living in the future.

Public Impact

The only sector where jobs have consistently increased are government jobs.  According to the government’s Bureau of Labor Statics, in 1946 there were 2.3 state and local government employees per every 100 citizens.  Today, there are over 6.5 government employees per 100 citizens.  The government now must find ways to not only pay for these employees but also pay for their benefit and retirement programs.  The government administration cost for running programs that they have created eats up about 42% of every dollar collected.

Public Impact

All the cost of government and its employees must be supported and paid for by a declining U.S. tax paying workforce.  A large portion of all government employees hold administrative jobs that produce no real product.  They do produce future liabilities.  More tax revenue from all sectors of the economy will be needed to pay for expanding government.

Underfunded Government Pensions

A political and economic crisis is brewing.  State and local government pensions are underfunded by three trillion dollars.  Public schoolteachers’ pension underfunding totals about 990 billion dollars.  California alone has underfunded government pensions of 535 billion dollars – six times the state’s annual budget.  The government has promised pension and health-care benefits worth more than $700,000 per retired civil servant.  Who is to pay for this and how do they do it?  How did they lose control of these funds?

Underfunded Union Pensions

According to the Pension Benefit Guarantee Corporation (PBGC), the average union pension has resources to cover only 62% of what is owed to participants.  Less than one in every 160 workers is covered by a union pension with required assets.  We are talking about a systematic and demographic problem where there are too few participants paying into the program and too many receiving the benefits.  Remember, retirement accounts are a source of revenue for the government, and this will create shortfalls for them.

Public Impact

Along with government pensions, underfunded union pensions will play havoc on the lifestyles of many Americans.  For many Americans, retirement may not be an option in the future.  Lifestyles and standards of living will have to change.  Less income for retirees means more people may rely on government benefits in their old age.  You could see more and more Americans outliving their retirement accounts.

Debt of Individual States

States overburdened with pensions and rising labor and administrative costs now face the problem of unfunded Federal Government mandates being forced upon them.  States have lost and will continue to lose revenue due to declining property values, unemployment and underfunded state pensions.

Public Impact

Once again, states that are in debt may have to cut services that they provide.  School and education budgets may be affected.  Increased taxes may be needed to maintenance and repair of infrastructure.  More money that goes to taxes means less money for family budgets and savings.

Credit Tightening

The U.S. Federal Government understands the velocity of money.  Money must move in order to grow.  Many of the government financial bailouts were based on the velocity of money.  The government released bailout money with the hopes that the dollar’s release would be spent and taxed a couple of thousand times for each dollar printed.  The hope was that this action would increase the much-needed tax revenues.  What they were not counting on was that the bailout money released to banks and other financial institutions would not be distributed.  The much-needed tax revenue didn’t occur, putting the government in an even deeper hole because the bailout money was borrowed money and now interest must be paid on it.

Public Impact

The strength of the economy is centered on the production and purchase of products, goods, and services.  In the past, many of the purchases made by the public were made with the use of credit cards and loans.  Credit became an acceptable way of purchasing services and goods.  Now with unemployment, foreclosures, bankruptcies and failing medium income levels, people are beginning to scale back and trying to live within their means.  All these issues will result in a declining standard of living for the average American.

Private Sectors’ Inability to Save

All the elements of the government’s unsolved mysteries that we are discussing result in one thing: declining tax revenues for the Federal Government Instinctively, the government is now searching for more venues where taxes and regulation can be applied.  The result of the government’s actions simply means more of the average American’s income will go to taxes and higher prices on goods and services.

Public Impact

This is devastating.  What about the future?  What about retirement income? What about a family’s ability to fund education for their kids?  Yes, this is a problem, but remember, your will probably be living on all those wonderful government benefits.  Wait a minute, the government may or will have to cut some of those benefits just to survive.  You may end up spending more money for fewer benefits.  All these government issues

will impact your ability to save.

Government Dependency

Right now, 47 million Americans are on some form of government program.  It is important to re-read that sentence and let the thought sink in.  One out of every seven Americans participates in some type of government assistance.  For a politician, this is called a voting bloc.  For the average citizen, this is called a disaster.  Are government programs simply a scheme for politicians to get re-elected?  Currently, 47% of America’s workforce are zero-liability federal taxpayers.  This means they pay no federal income tax.  This is a large dependent voting block that is financially unsustainable for the Federal Government.  If a politician promises a benefit to people who don’t have to pay for that benefit, I assume he or she will get a least 47% of the American vote.  To the government, dependency means control and control means power.

Public Impact

Almost half of all Americans are willing to give up some of their standard of living in exchange for government benefits.  But this unsolved mystery may cost us our country.  If a couple reaching the age of 65 averaged $47,000 in income per year, they would have deposited about $43,000 for Medicare coverage during their working years.  According to the government, the average-American couple would receive about $283,500 in Medicare benefits.  This represents about a $240,000 loss to the government per couple.  Also, that same couple would have paid $198,000 in social security benefits.  The government, between social security and Medicare benefits, would lose an average of $368,000 per couple.  Remember, all these issues are occurring with a declining workforce and aging population that is experiencing an inability to save.  Best-case scenario in the future is fewer benefits at a higher cost and more Americans living longer on more government programs.

Hidden Inflation

Inflation is nothing more than a hidden tax.  The government releases more currency in circulation that is not related to productivity, causing the devaluation of the dollar.  If the dollar has less buying power, then prices on just about everything go up.  As prices go up, so do the taxes on the purchase of those goods and services.  Inflation creates velocity of money for the Federal Government, but it risks the slowing down of the overall economy.

Public Impact

For every American, this is a different problem to avoid.  The hope is that income will keep pace with the rising cost of goods, but this isn’t always the case.  The reality for many Americans is high personal debt, unemployment, foreclosures, and inflation, which are the cause of their financial difficulties.  The Federal Government has a role in all these problems, yet the solution to these personal problems according to the Federal Government is more government programs.  The question remains, if the government offers you a dependency program at no cost to you, would the average American take the program?  The government social-programs costs go up every year because of inflation and government administrative costs.

The Cost of Going “Green”

A couple of years ago, UN researchers estimated that the cost of going green would be about 600 billion dollars a year.  Now a new report has more than tripled that cost from two years ago to 1.9 trillion dollars a year or 76 trillion dollars over the next 40 years.  Make no mistake, this 251-page report “World Economic and Social Survey 2001” has very little to do with the climate.  This press release for this report discusses the need “to achieve a decent living standard for people in developing countries, especially the 1.4 billion still living in extreme poverty and the additional 2 billion people expected worldwide by 2050.”  That sounds more like global redistribution of wealth, more than climate control.

Public Impact

More energy regulation is on the way.  Government regulations are a tax with little or no direct benefit to the consumer.  The cost of these regulations (taxes) will be passed on to the public.  The UN is about money and global control.  They have done very little to stop massacres, genocide and protect individual rights against warlords and dictators.  The UN shudders in fear and takes months if not years to respond to a crisis.  The UN, it’s not about “the people.”  One must also realize that under the crust of our planet lies a molten core that doesn’t rely on any rules and is uncontrollable by man.  What is important is that money can be made if the public can be convinced that man is really in control of the universe.

Illegal Immigration

The social fabric of our country is being shredded by the indecisiveness of our political leaders.  Forgiving an illegal act in the form of amnesty is living proof that the current immigration laws are not being applied or enforced.  Inviting someone to stay in your home is one thing; having them break in your home and stay is another.  The inability to protect our borders as a country will eventually cause significant turmoil financially.  Individual states are beginning to take steps to protect themselves from illegal immigration because the Federal Government has refused to take the lead on this problem.

Public Impact

ost! There is a very large increase in costs to house, educate, protect, shelter, feed and provide benefits to people who have no responsibility to pay into the system that provides the benefits.  We also must consider that the illegal portion of the immigration problem is not overflowing with scholars, college graduates, trained professionals, or skilled workers.  At best, it may take one or two generations of unskilled workers to grow and prosper in our country.  Meanwhile, the U.S. taxpayers will pay for all the benefits

Health Care Death & Taxes

Since the government is in the business of raising revenue (TAXES), they have now forced themselves into a position of raising revenue through their government-run health-care system.  In a very unique way, the government is now in the business of death.  After all, when someone dies, the government has no more liability for that person’s benefits, and it will realize financial gain.

A good business owner, to be successful, needs to understand that owning a successful business means controlling and maintaining operating costs to a minimum.  If a business owner can reduce costs (benefits) or inventory (people), then the business has a better opportunity to survive and succeed.

Now that the government is in the business of death, they might adopt the stance of – IF I MUST PAY FOR YOUR HEALTH CARE, PLEASE DIE QUICKLY.  I know that doesn’t sound politically correct, but what has been correct in politics lately?

According to the government’s own Government Accountability Office (GAO), the U.S. has a declining workforce and an increasing aging population.  You also must understand that another component of our nation is that a large portion of our population are ZERO-LIABILITY WORKERS, ZERO- LIABLITY VOTERS AND A RAPIDLY GROWING NUMBER OF RETIREES ALREADY LIVING UNDER AND RECEIVING BENEFITS FROM GOVERNMENT PROGRAMS. This means that a larger-than-ever portion of our population pays little or no taxes at all.  Another facet of the problem is that people are living longer on more government programs.  A summary of the demographic changes that are confronting our nation is simply this: we have a declining workforce, an aging population and unsustainable government debt and spending.  But who really cares about facts and common sense?  That’s boring.  If the majority, or close to a majority, are ZERO-LIABILITY (they don’t have to pay anything) recipients of these benefits, they believe that they can get something for nothing, and let’s get as much as we can: it’s free.  Unfortunately, today, free means to pass the buck to your kids or, hopefully, someone else’s kids.

Every Third World dictator survives on a series of events, and when a great opportunity comes along, they know this: NEVER LET A CRISIS GO TO WASTE, and if there is not a crisis, then go out and create one.  If you can control the revenue, you can control people’s lives.  Right now, our government is a circus with no ringmaster and way too many clowns.  They, the government, need revenue desperately.  Taking over a large segment of the economy is the government solution.

I’ll Gladly Pay You Tuesday for a Hamburger Today

The solution for the government is simple: create a crisis, control the outcome and profit from it.  First, the crisis – health care.  The solution – government-run health care.  Now watch their hands very closely.  They are going to tax you now for something that won’t start for three or four years.  “Oh, this is wonderful,” they will claim.  “Look, look – for three years we have created a great surplus” by collecting taxes for the program three years before it starts.  Oh, it will be wonderful right before the next presidential election.  After that whoever gives a darn, it’s free.  So, health-care taxes are their solution, and the reality is the health-care program is secondary.  Remember – declining workforce – aging population, uncontrolled government spending and a growing number of ZERO-LIABILITY TAXPAYERS (nothing to lose).

It’s About the Money

This money (health-care taxes) is needed now so that the dollar doesn’t collapse – that’s the urgency.  There is concern that the dollar could lose a lot of its value.  If that happens, it’s everyone for themselves, and that includes all those who survive under government dependency.

So, in the next 3,000 days, the government will manage its revenue by issuing life-and-death decisions for their profit and survival.  Hey, they might get lucky.  Who knows, a well-timed pandemic or two would save the government trillions in benefit payouts if people die.  If the government could only figure out how to collect the largest amount of taxes with the least number of paid benefits, then everything will be OK.

Unfortunately, I’m old enough to remember the Cold War with the USSR.  I witnessed the U.S. Government spend the USSR out of existence.  For years afterwards, Russia floundered.  It is my fear that what I am now witnessing is our own government spending us out of existence.  We are very close, as a country, to not being out of existence.  We are very close as a country, to not being credible anymore.  Recently, our leaders have traveled the world apologizing for all the faults of America, without any mention of what the world would be like if America never existed.  Now I regret that I need to apologize to my children and grandchildren for giving our country away.  Perhaps is now our turn to become just another country that was once powerful and filled with personal liberty.  We are spending our country out of existence – but at least, for now, it’s FREE.

These factors are the unsolved mysteries of government. The government’s inability to seek and solve these issues will continue to increase the problems in your lifetime.  If you met people in your life that had all these problems the government has and their goal was to simply get money from you, would you avoid them like the plaque or gladly give them your money?  You must recognize and avoid the problems that will impact your life as if they were life-threatening diseases.  By recognizing the issues, trends and shifts, and the demographic effect of government spending and debt on your future, you will begin to discover the solutions to the problems they create.

Discovering the Path to Solving the Problem

Right now, you are choosing a path for your life that will determine your future success.  For much of your financial life, you have been taught by traditional thinks “what to think” instead of “how to think.”  You must understand that this is nothing more than a process of transferring away your wealth to those who create the situation, control the outcome and profit from their actions.  These companies are relying heavily on you to not think. 

If you would like to have a conversation on how we can help you:

• Increase your monthly income. 
• Eliminate the possibility of losing money in your retirement account.
• Eliminate fees and commissions.
• Hedge your purchasing power against inflation.

And if you would like to know how we can do all this without you spending one more dime than you are currently spending, please call me, 1-844-906-0606 and schedule a time for us to have a confidential conversation.

This educational material is provided by the Wealth & Wisdom Institute and Common Sense Economics, LLC.