Budget Begins Colliding With Reality

Some say we need a short term fix (stimulus) to get the economy to come back...say some.

No, we need to cut the spending now or we will be bankrupt soon...say others.

So what is the answer?  There isn't one.  We spent way too much money believing that things would always get better in the future and the next generation would be even more wealthy so will be able to pay off today's borrowing.

As today's headline article is saying, the actual budget is colliding with reality...and that reality may be that there simply isn't an answer.  We now have cancer and are going to need massive, painful chemo treatment to survive....but the chemo treatment may end up killing us anyway.  Witness Greece.

Many economists agree that the United States needs a short-term spark — call it “stimulus,” if you like — in the form of tax cuts and increased spending. But, the consensus also holds that the nation must control its deficits by reforming entitlement programs like Medicare and also by increasing tax revenues.
    
Yet the longer the economic slump goes on, the more the "short term" starts to look not so temporary, and the closer the "long term" becomes.

The need for short-term stimulants, such as cutting the Social Security payroll tax (seen last year as a one-shot tactic), now looks like something that will go on for a while.

In fact, President Barack Obama proposes to cut the payroll tax even further to 3.1 percent and to extend it to employers as well as employees. This would enlarge the deficit and add to future government debt.

Meanwhile an inevitable demographic fact — the retirement of the massive Baby Boomer generation and the costs of paying the Social Security and Medicare benefits promised to them — keeps inching closer.

Not waiting to collect entitlementsSome of those Baby Boomers aren’t waiting for their entitlements. Having lost their jobs and seeing little chance of working again, they are collecting their benefits early: getting declared disabled and qualifying for Social Security disability benefits and Medicare. This only adds to the budget strain.

See it here;  http://www.msnbc.msn.com/id/44609575/ns/politics/

The reality of the coming mayhem may tank the financial markets.  The stock market was down 3% yesterday and is falling again today.  I wonder if the markets are finally figuring out that the only answer to fix our financial cancer is massive chemotherapy.....which will make us all lose our hair and throw up.