the debt-paying generation

1

Will Opportunity Keep Knocking?

The Implications ofMounting Federal Debt for the

Debt Paying Generation

Presentation byWilliam Beach

to theDenver Committee for HeritageYoung Professionals Reception

January 21, 2010

2

The Obligations of the Debt Paying Generation

• Total debt expected to grow from $5.8 trillion in 2008 to over $11 trillion by 2019.– That is from 41% of GDP in 2008 to 82% of GDP in 2019.

• Tsunami of debt from Social Security, Medicare and Medicaid will push total debt to 320% of GDP in 2050 and 750% in 2083

3

4

5

6

7

8

Debt Always has to be Paid

• Payment can be made by– Raising taxes– Lowering future spending– Inflation or dollar devaluation (debt repricing)– Debt repudiation

9

Unfortunately,we have very big debts

to come,and our incomes won’t grow as

fast as our spending…

10

11

12

13

14

Let’s Get Personal:Repaying this Debt

Will Reduce the Quality of Your Life• The “economic stimulus” debt alone will cost you $280 per month for

the rest of your life = buy and trash an iPod a month.• Your generation’s average tax rate will double and your children will

pay three times as much. That probably means:– First home purchase later in life.– Marriage later in life and later to start to families.– Longer time to pay off student loan debts.– Slower earnings growth over your lifetime.– Less savings for education, health care, and retirement.– Smaller wealth transfers to your children and grandchildren.