| Home &
Contents | 5 Core Problems | Feedback
| Link Index | Must See |
You may have viewed the Summary section of the Home Page
and its link to the picture summary of 5 Core Problems.
Following is the summary in more detail, via 12 questions in text form
- - and a bottom line
Before clicking any of the following links, read the 12 points completely - - then
return to the link of choice
12 SERIOUS QUESTIONS covered by
this Report Series
While we celebrate many things, such as longer life
expectancy, a nation not at war, and more consumer choices - - IS IT FAIR TO FAMILIES and their CHILDREN TO INHERIT
ANY OF THE FOLLOWING 12 ITEMS - - instead of our fixing them ?
- FAMILIES - An economy where inflation-adjusted median family
incomes have hardly budged in 2 ½ decades, and that
of full-time employed males has dropped, despite record numbers of mothers leaving their
children to day-care by others to enter the workforce trying to make ends meet? We have an
economy where family savings are lower with higher household debt ratios than prior generations. Americans
have not saved so little since the depression of the 1930s - spending well beyond growth
of their incomes. Each working family must support, in
addition to themselves, more senior citizens, more state & local government employees and more total debt than ever before. Additionally, although life
expectancy has increased relative to our past, the Health Care
Report shows other nations have better life expectancy with better quality health
care, and do so at much less cost in both government and private sector spending.
Family pressure is caused by too much government, to much private sector debt, poor
international trade balances, and poor education quality.
- Government DEBT - A federal government debt burden
of $44,000 per child ($14 trillion end 2010) and
growing, more than half of which was created in the 1990s, even for children still
in diapers? (this is on top of record foreign debt, debt of state & local government,
and un-funded & off-budget items). It takes $40 million per hour, 24 hours per
day, 365 days per year to pay the interest on federal government debt, without even
counting interest paid on record private sector debt. In relation to the size of the
economy, recent federal debt 2-times higher than the early 1970's -
- and foreign entities now receive 49% of the interest on debt outstanding to the
public, double that several years ago. Even in the past
fiscal year the federal government (despite raking-in the highest income tax ratio to
economy size in history) debt increased to a new record high, while at the same time they
said they ran a surplus as they drained trust fund surpluses for non-pension spending..
(see trust fund report
2000 & 1999). Some claim they are paying
back debt, yet debt totals have expanded. What they need to tell you is that they are
siphoning off surpluses from the social security and other trust funds and using that to
retire a few T-bonds while covering that by putting in the trust funds more non-marketable
IOUs which increases the debt total.
- Private DEBT - This debt psychology, with propensity to create huge amounts of
federal government debt, has spilled over into soaring private sector debt,
primarily in the areas of soaring domestic financial sector, business sector and household
sector debt at growth rates much faster than general economic growth - as shown in the
powerfully-illustrated total American debt report - where
the sum total of private sector and government debt has soared to a new record of $59
Trillion. Thomas Jefferson would have shuddered.
- EDUCATION - An education system for which the
productivity index declined 71% as quality eroded
despite tremendous increases in per student inflation-adjusted spending and despite
smaller class sizes than before, where public school cost per student is 2-3 times higher
than private schools and are still less competitive vs. major foreign competitors than was
the status for their grandparents. U.S. 12th graders scored at the bottom
of the list of nations taking the recent international exams
in math & science , and the Dec. 2000 report shows our 8th graders failed
to improve their previous poor exam showing, as foreign students
have a more rigorous education. Colleges reduce standards to meet poor high school output
and huge percentages of freshman require remedial courses.
Many college graduates carry huge student loans to qualify for jobs formerly performed by
high school graduates. Recent studies on Textbooks and math teaching
methods showed 85% of middle schoolers use science text books that are
significantly error-laden and unacceptable - - and that. honors high school science
texts are no more difficult than an eighth grade reader 50 years ago, and 200
mathematicians and scientists, including four Nobel Prize recipients and two winners
of the prestigious Fields Medal math prize, deplored math teaching methods,
saying they are 'horrifyingly short on basics'
`The quality of schooling is far worse today than it
was in 1955,'' Dr. Milton Friedman, the Nobel laureate wrote in the Washington Post. The
international organization, OECD, called "U.S. schools mediocre
- PRIVATE SECTOR SQUEEZED -
Big Picture - The share of the economy controlled by the private sector has been
squeezed down to a 49% share, because government (sum federal, state & local
government) spending controls 51% of our economy, compared to but 12% when I was young.
The Era of Big Government is not over. Did our founding forefathers
intend such dominance and dependence upon government?
- TAXES - An economy so much dominated by expansive federal &
state/local government growth, at growth rates many times faster than growth of the
general economy, that the average person works 5 months each year just to pay per-capita share of all federal, state & local taxes
compared to 1.4 months of work required by prior generations. That's 300% more working
time required to support government than before, and more than families pay for food
and housing. Last year was a new, all-time record in inflation-adjusted taxes to all
levels of government paid by median income dual-earner families. No wonder family savings
are negative for the first time in history and family debt ratios are at record levels. No
wonder fewer families have the choice for mother to stay at home to help assure more
disciplined and better educated children. And, not only are federal, state & local
governments siphoning off family earnings for taxes faster than their earning growth, they
have also siphoned-off future pensions from the social security trust funds. This unending
money-appetite of government must be curbed. Since government has no motivation to reduce
spending, since there are so many feeding at the trough, then the only way to place
pressure on spending is to reduce revenue - - meaning citizens should push for major tax
cuts. If such cuts squeeze government politicians and bureaucrats then it's about time.
- GOVERNMENT SECTORS expanded -
a. summary - An economy that is 3 times more
government-dependent than I inherited - - now costing $19,218 per man, woman
and child - - because spending increased much faster than the economy at large? The combined government share (sum federal and state/local
government spending) of the total economic pie is 45% of the entire economy (national
income) today, compared to a 12% share before. And, this does not include an additional
14% consumed by regulatory compliance costs. Therefore, spending plus regulatory
compliance costs equate to 65% of the economy's total national income. Why did this happen
when most agree the private sector is the most necessary engine of future incomes and
living standards. (you might like to view the 3 dramatic
graphics of the Government Growth Report again, and then ask what share of the
economy should government control and who says the 'era of big government is over?')
b. Federal government - An economy where federal government's
spending has grown 8 times faster than the economy, since I was an infant.
It now consumes 32% of the economy, or $12,338 per person - - compared to consuming only a
3% share of the economy prior to the New Deal of the 1930s. And, all the excess
growth has been in the area of social spending, an item not included in the 4
principal functions of government envisioned by our founding
fore-fathers, according to the Federalist Papers of 1787.
c. State & Local government - An economy burdened by 12.7 million excess state & local government employees and pensions,
because their head-counts continue to grow faster than the general population - -
and their spending increased three times faster than growth of the economy since
World War II, to today's $6,607 per person - consuming 18% of the entire economy, compared
to a 6% share post WW II. While most people know each working person must support more
seniors than ever before, very few citizens know they must each also support more state
& local government employees than ever before - - a double whammy.
- REGULATION IMPACT - An economy where the relative share of the economic pie left
to the private sector has become smaller due to government expansion - - and even smaller
considering $1.2 Trillion in un-funded regulatory compliance cost
additions of $4,154 per person - now 14% of the economy. Adding 14% unfunded regulatory
complaince cost to total government spending of 45% of the economy, sums to 59% of the
economy is consumed or controlled by government, leaving but 43% to the 'unburdened'
- SOCIAL SECURITY - An economy that is draining the future
potential of our young - - by causing families to work more months each year to
pay higher taxes to support more government (than prior generations), and to provide
current retirees with inflation-protected social security and medical benefits that will not be provided to today's
working families and children when they retire. As mentioned above, every penny of
additional FICA taxes paid by workers supposedly to build surpluses
in the trust fund has been siphoned-off as fast as it arrived and spent on non-pension
items (an illegal practice for private sector pension funds). How does that 'save
social security first?' The same goes for the other trust funds - - now bulging
with non-marketable IOUs with zero plan to repay.
- INTERNATIONAL - An economy that continues to prove its lack of net international competitiveness with huge trade deficits
setting new, and now very serious records each year - all indicating unsustainable
increased debt owed to foreigners. Our economy is three (3) times more dependent on
international trade for its goods - compared to prior generations. An economy that was the
world's largest creditor nation when I was an infant is now the world's largest debtor
- - becoming more so each day. The government recently set up a new body to review this
serious issue, the U.S. Trade Deficit Commission - - its consensus December 2000: the
situation is extremely serious and not sustainable. Should we feel more secure if today's
economy has less potential to support an economic surge necessary to meet a major
challenge equivalent to World War II, as shown in the National
Security Report? A 126-year graphic in the Comparative
Spending Report shows the U.S. has followed the lead of many other nations expanding
government's share of the economy.
- ECONOMY - An economy where inflation has eaten 89% of
their currency (although slow economies elsewhere and a slump in commodity prices have
provided some recent slow down, and especially now that government has re-defined how they
measure inflation and other indicators (revising
statistical measurements) to make it appear a bit less, and where its international buying power (the U.S. dollar) may again be
threatened. An economy where productivity growth rates have fallen 70% in 35 years if measured consistently with past
criteria - - from rates that were then averaging 3-4 times higher, despite some recent
up-tick which can be attributed not to real productivity improvement by the old way of
measuring but by creatively changing how they count. The Energy
Report shows declining U.S. oil production & reserves, soaring consumption and
imports - - more dependent than ever on others
- TRUST AND VOTING - Voter Turn-out Report shows a
continued 40-year decline in citizen participation, with a low in the 1996 and 2000
elections - despite record political media campaign spending and voter registration drives
- - and the Trust in Government Report shows 69% do not trust
government plus a new low in citizen trust in ethics & honesty of elected officials
and news media professionals - - an increase in lack of trust from 3-decades ago - serious
negative indicators for a representative democracy, compared to prior generations. See
also the Elecction Report which graphically shows how, in
the past several elections, America seems more like two nations instead of one.
WHERE ARE WE ?
You have reviewed the 12 questions. You have reviewed 5 graphics summarizing the 4 core
problems of government dominance, education quality, America's total debt and
international trade indebtedness. Following is a 'bottom line' to complete this Summary
Report of the Grandfather Economic Report series.
Once you have visited each of the sub-reports of the Grandfather Economic Report , which contain
pictures demonstrating the data, it is most probable that you will concur with the above,
and the following:
- From the subjects covered in the Grandfather Report series, the author concludes that the
common denominator (the cause) for negatives summarized by the 12
Serious Questions above - - can be traced to government expansion in the social
arena, with said expansion at rates much faster than the growth of our economy over the
years. That's a direction at major variance to that envisioned by the nation's founding forefathers and actual practice during the
first 150 years thereafter - - which did not include a 'social (entitlement, income
redistribution, social-engineering) arena.' Despite such consumptive spending, or because
of it, social ills remain and families face real threats. Our so-called 'free market
private sector economy' has become smaller (relative to the size of the economy) and more
dependent on debt, and less free - - than it has been or should be.
- Socialization (as it is often called) with government dominance has a proven record
of failure wherever and whenever it has occurred. In fact, our nation was founded by
those seeking less centralized authority control over their lives - - not more. This has
progressed in America to an extent our founding forefathers would have believed
impossible for the nation they envisioned. Government has become so large that its
productivity and effectiveness provided 50 years ago has been diminished - - and, its
relative size is undermining much of what was and should be special about America.
- The economic future for our young families and their children has been diminished,
compared to the past and to what it could and should be - - and, it has happened on
'our watch'. Serious action is needed, if we want to be proud of our bequest. We must
become more aware - - the purpose of this report.
- The author has concluded that one of the core solutions to help resolve these problems
are actions to increase the relative share of our economy's free-market private sector, by
reducing the relative share of government sectors at all levels (federal plus state &
local), and the regulatory and debt burdens. Downsizing, restructuring and
privatization should be considered to reduce government spending and regulation cost
ratios. Any other approach may be only 'working at the fringe,' without lasting positive
effects for the economic future of our young to the degree deserved.
- As former British Prime Minister Margaret Thatcher said in Washington on October
22, 1997: "We must have small government, in which as many functions as possible are
carried out by the private, not the public sector." Thomas Jefferson said,
"the least government is best" and "public debt as the greatest of the
dangers to be feared."
- The $4 trillion federal-state-local government spending dependents, and those causing
another $1.2 trillion in regulatory compliance costs, are not going to give up their power
& privilege without a fight. Most politicians will cover their eyes while they
promise everyone that his or her government program will not be cut, since they want to
protect their political careers - - and, recognize that our children and grandchildren
cannot vote on their futures.
- They may prefer subterfuge to concrete action, by such measures as: 'cooking the numbers' by 'redefining' inflation, GDP and
productivity numbers or revising the way we measure education output quality - - compared
to the past. As many fight to retain the power of bloated government, some will camouflage
their intent with such rhetoric to make you believe they are trying to save 'our children',
or some other special interest group. Further, they may try to give the impression of
responsibility by saying they will pay off debt when, instead of reducing total spending
they have been increasing total debt by raiding trust funds.
- Additionally, those calling for tax cuts (which is the only way to dampen spending)
will be blasted by pro big government forces who want to continue big spending, instead of
reducing spending so today's working people can cover government with not more than 1.4
months of work each year, instead of today's 5.3 months. The fact that today's tax revenue
intake is the highest percentage of national income in peace-time history, yet that's
considered OK. Any time you hear one opposing tax cuts in peacetime, or at best
trying to narrow same to 'targeted' cuts, you are listening to a pro-big government
person. Many games will be played so they will not 'bite the bullet' and target combined
federal, state & local government spending to about 20% of national income, instead of
the current ratio of 39% of our economy - - and, downsize federal and private sector debt
ratios to the lows of past - - and bring our nation's trade into balance.
- Not taking restructure-downsize actions would be immature, selfish, self-serving, and
irresponsible toward our youth - - the next generation who, we are reminded, cannot yet
- Several generations ago young men & woman and their leaders went to war, and
many were lost. They did not stay home and hide safely behind the toys of children or the
wheel chairs of the elderly or cook up schemes to deceive. They were brave, and they took
firm action to make things right for the generation to follow them. And, when it was over
they came home, reduced government spending to the pre-war ratios, went to work and built
families with values aimed around the family including a 'at home' mother for the
children. This grandfather wants to honor their sacrifice and the wisdom of our founding
fathers by at least returning our government to the same ratios, and to pass on to my
grandchildren that which was passed to me. Is that a selfish wish? I don't believe I am
alone in this quest.
- Additionally, the author believes there may be future national security risks,
since the government share of the economy is so much larger and more socialized than
pre-world war II, with less education quality relative to foreign nations. This leaves
less economic surge potential in the non-government-dependent sector (pure free-market) to
provide massive defense build-ups as might be necessary to counter-act a major security
challenge, than was the case before WW II. In September 1997, the retiring chairman of the
Joint Chiefs of Staff said, "America has a poor record of predicting in advance such
challenges." Dare we leave our younger generation with less free-market economic
potential for their possible defensive surge needs than we inherited? This is discussed
further in the Celebration Report.
- We have experimented with the socialization (read 'collectivization') of our
beloved America to an extent never believed possible. We dare not lay that load on the
backs of our children and grandchildren. Dare we ?? Our generation should reverse these
trends - - not pass them on to our kids.
These reports are intended as a public service for American families and youth, to
enhance individual knowledge and to encourage protective strategy development.
If you review each mini-report in the series, the author would like to hear from you
and see your hard data evidence if you have come to a different conclusion . If you have
data to add to make this series more comprehensive & accurate, this would be most
appreciated by E-MAIL to Michael Hodges
These 12 items high-light a summary of certain economic
threats to families and youth, compared to prior generations.
Since we are all in this together, let us become more
Please do not develop a negative feeling. There are so many great
& positive things about our beloved America to celebrate, and several significant
positives are shown in the Generational Celebration Report
- such as improved life expectancy, zero wars and more consumer choices. But, there are
also some negative trends, as outlined above. Perhaps if more are aware of the
negatives even more solutions & positives will result. The objective of these reports
is to increase awareness of certain disturbing items - to further improve our great
Enhanced knowledge for the above 12 questions is
presented in a series of easy-to-understand picture reports - - listed by subject category
on the home page: 'Grandfather Economic Reports'
WHICH THREATS ARE NOT COVERED?
- This report series will not cover other major negative areas compared to the past, such
as: crime rates, prison populations, lack of safety in the streets, rampant drug use, the
breakup of families, the percentage of children without both parents, and high teenage
pregnancies - compared to the past.
- The cause of many such social ills can be laid at the doorstep
of the economic-related items mentioned above, most of which were driven by increased
government dominance resulting in less reliance on our prior strengths: strong 2-parent
families with full-time mothers, effective churches (as conscience may require), quality
schools, strong savings, minor household debt, individual responsibility - - and small
DO YOU AGREE THIS IS NOT A PRETTY PICTURE
TO BEQUEATH TO THE NEXT GENERATION?
Does it make you proud, and unconcerned? Would you hope for a better
picture for the economic future for your family, children and grandchildren?
YOU ARE INVITED
You have just read the Summary page via 12 Serious Questions identified in the Grandfather
Economic Reports - A series of picture reports to increase awareness of difficult
economic challenges facing families & youth, compared to prior generations.
For a summary of other serious findings presented of 5 Core Threats, or a summary of
Mega Trends along the 'road traveled', read links 1 and 3 of the Home Page Summary - -
- - after which you may review the Home Page index of all chapters covering a graphic
presentation reviewing economic issues facing today's generation compared to prior periods
- - in an easy-to-understand format. You can pick the subject of interest to you for more
in-depth knowledge of issues impacting us all.- - each with dramatic color graphics
proving and expanding the above summary on other subjects. Chapters include: family
income, debt, savings, government spending and size, trust funds, education quality,
social security, regulations, taxes, inflation, productivity, foreign trade and exchange,
voter turnout, trust, celebration, national security, energy, and health care/life
TO THE TOP
& Contents | 5 Core Items | The Path | Feedback
| Link Index | Eye-opener
| Must See |
© 1997-2012 Michael W. Hodges. The Grandfather Economic Report series is the
intellectual property of its author; all rights reserved under Copyright Conventions.
Permission to redistribute all or part of this series for non commercial purposes is
granted by the author, provided the associated web page address is included and full
credit given to the Grandfather Economic Report and the author, Michael Hodges. Notice
appreciated via email.