Our kids are now facing a new world that’s different from the one in which they were raised, having been sheltered from reality by parents who in many cases took on debt to maintain a lifestyle that they could no longer afford. The "new" changes in the tax code – the increase in the social security payroll deduction being only the first – are leading to yet another decline in take-home pay and are eye-opening for recent college graduates. A 21 year-old woman was correct in her assessment that this would lead to longer term effects harmful to the economy, such as retarding the growth of new households for the future. But these are only the earliest and easiest of the choices that they will face.
The simple reality which we face is that there are too many fiscal promises piled upon too small a base of productive assets to adequately cover them. We’re looking at years of federal deficits in excess of a trillion dollars annually as the government becomes the pump which pushes money through the economy via defense spending, Social Security and Social Security Disability Income benefits, the SNAP program. The young college graduate mentioned in the article states that the money now leaving her paycheck to the government via the increased payroll tax will mean less for entertainment. But the cascade of spending and the coming increase in taxes – because meaningfully cutting spending will alienate a good portion of the almost half of the citizenry receiving some government benefit – will mean that more than entertainment is going to go away. The youngsters of Southern Europe – Spain, Greece, Italy – are seeing their prospects disappear and if this country can’t get a handle on the spending, then our young adults will follow in their track in several years.
Because the difference between the United States and Southern Europe is no more than a few years.