Jimmy Hoffa went “missing” on July 30th 1975. It’s long believed by many that this man, who once made the Teamsters Union the largest organized labor force in the American marketplace, was killed by the mafia.
It’s 2019, and I like to joke that there are many praying that Jimmy Hoffa’s missing body is found and resurrected from the dead. Donald Trump got elected on the promise that he’d “Make America Great Again.” And while nobody knows for sure what time period Donald Trump has in mind, there is no doubt that folks like Democratic presidential candidate Bernie Sanders, who have similar dreams about “Making America Great Again,” envision times like the 1950’s, when Jimmy Hoffa type guys were making organized labor great.
According to politicians like Bernie Sanders and Elizabeth Warren, times in America are hard, and America has a disastrous economy that crushes the everyday folks living on “Main Street.” According to them, the economy needs to be completely overhauled and replaced, because things are not only bad now, but they are about to fall off a cliff.
In other words, the sky is falling, the sky is falling…
Bernie Sanders and Elizabeth Warren dream of Jimmy Hoffa being raised from the dead and unionizing most if not all the work force. They want a world without billionaires, where all their wealth is siphoned off and redistributed to the masses, so we can allegedly afford programs like Medicare for all, free college tuition, free childcare, guaranteed jobs with a guaranteed living wage, and a host of other promises.
But are things really as bleak as they make things sound? Do Bernie Sanders and Elizabeth Warren really need to raise Jimmy Hoffa from the dead? Do we really need to overhaul the current economic system and implement a democratic socialist utopia? Or are only smaller more reasonable measures needed?
Economic Challenges Facing “Main Street” America
According to stats, American consumer debt is at an all time high, and is now at higher levels than the Great Recession and housing crisis of 2008.
Household debt is currently at a total of $13.54 trillion dollars. While total housing debt is lower than pre-crisis levels, and accounts for $9.1 trillion of total consumer debt, much of the increase in debt since then is driven by student loans, which accounts for $1.46 trillion dollars.
Additionally, there has also been an increase in growing credit card and auto loan debt levels than in prior years.
But it appears that in spite of the increase in debt, Americans are managing their debt levels well, as only 1.1% of mortgage payments are currently more than 90 days delinquent. And according to data, at the end of 2018 there were only roughly 755,000 bankruptcy filings in America. Such represents a continued annual decline in bankruptcy filings.
According to information at Debt.org the highest level of bankruptcies in America was in 2005, in which 2 million people declared bankruptcy. Ever since 2005, annual bankruptcy filings have fallen to historical lows.
With America having an adult population of 209 million people, that means in 2018 only 0.36% of the adult population declared bankruptcy. Such means that over 99% of American consumers are making their monthly debt payments.
Medical expenses are increasing. Bernie Sanders and Elizabeth Warren believe we have a healthcare crisis in America.
And it certainly seems that way on the surface.
According to government statistics, as of 2017 the annual medical expenses in the United States totaled $3.5 trillion dollars, or roughly $10,000 a person. Such has increased year after year for quite some time. Such accounts for 17% of America’s Gross Domestic Product.
According to data about 66.5% of bankruptcies every year are in part due to medical expenses. Yet according to government statistics, only about 10% of America’s annual medical expenses ($365.5 billion) are actually paid out of pocket by Americans.
The rest of it is paid by insurance, Medicare, Medicaid, and our employers. That means that though the average medical expenses per American is roughly $10,000 per person, the actual annual out of pocket expenses is only $1,000 per person.
And when you further break that down, you’ll discover that only 5% of the population accounts for 50% of all medical expenses according to statistics. Whereas the bottom 50% of the population accounts for only 3% of all medical expenses. In the lower 50%, the average annual healthcare expenses only amounted to $276. And of these expenses, 50% of all medical expenses were generated by those over 55 years of age, as managing the healthcare of an aging population becomes expensive, especially heroic levels of end of life care.
So, in spite of our growing medical expenses, the truth is that Americans overall are affording their healthcare costs. In spite of 66.5% of bankruptcies including medical expenses per statistics, bankruptcy in America is in sharp decline with only $755, 000 (0.36%) of the population declaring bankruptcy last year. That means roughly 500,000 people declared bankruptcy last year in part due to medical expenses, or roughly 0.23% of the adult population.
And while we need to be concerned about the growing level of healthcare expenses in America, especially those living on the margins, in spite of what Bernie Sanders and Elizabeth Warren are telling you, we hardly have a healthcare crisis that justifies an overhaul of our current system.
The truth is, a very small percentage of our population is generating most of America’s annual healthcare expenses. Most the expenses are generated by the elderly, and only a very small percentage of the population cannot afford healthcare.
There is no healthcare crisis in America. And, I believe anyone who says otherwise is either misinformed, misunderstands the issue, or is just outright lying to you. The truth is most people can afford their out of pocket medical expenses. And for the vast majority of out of pocket expenses, doctors offices are more than willing to negotiate affordable monthly payment plans, often interest free.
Student Loan Debt Crisis
There is no doubt about it, student loan debt continues to sky rocket in America. According to Experian, from 2009 to 2019, the amount of student debt has increased from $650 billion dollars to $1.41 trillion dollars. That is a 116% increase in only 10 years!
Such is an issue that needs to see serious reform, as tuition costs continue to soar. The average student debt a person carries right now is $35,000 a year. And with the increasing amount of student debt, such concerns many about the ability of future generations to afford college tuition in the future, but also major life necessities such as a home, car, and starting a family.
Yet in spite of all the challenges associated with the growing costs of college, just under 5% of borrowers are delinquent on their student loans. And there is a reason for this. $35,000 in student debt would equal about $350 a month in a monthly payment (See data/calculator.)
Of course, everyone’s situation is highly variable depending on their rate, term, and minimum payment allowed. And while $350 a month is nothing to sneeze at, such is about the equivalent of a reasonable used car payment.
While I believe serious measures need to be taken to keep the current costs of tuition lower, as the current trajectory over the next few decades is of concern, I don’t see how this justifies forgiving all current student debts and making college free.
Currently more than 95% of people with students loans are successfully making their monthly payments. If making monthly payments on student loan debt becomes too much of an issue, I think instead of forgiving everyone of their student loans, we should simply allow student loans to be discharged via bankruptcy again, like they were prior to 2005.That way those who truly cannot afford their loans can have them forgiven, just like any other personal debt, and those who can continue to afford their monthly payments can continue to make their payments.
America’s National Debt and Budget Deficit
As of June 2019, America’s publicly held national debt is at over $16 trillion dollars total. That equals about 77% of our Gross Domestic Product. While this isn’t the highest level of debt to GDP ratio (the highest was after WW2, when it was 121%), it’s definitely a pause for concern as the debt to GDP ratio has doubled since the early 2000’s.
And, with current budget deficits soaring at more than a trillion dollars a year, current projections over the next decade have that ratio increasing over 100% again by 2028, and dramatically increasing to 144% by 2049. While the United States is currently far from the worst offender when it comes to national debt levels (it currently ranks 43 out 207 nations), such sky rocketing debt projections question the sustainability of the United States and its’ ability to afford current government programs, let alone one’s that Bernie Sanders and Elizabeth Warren envision in their democratic socialist utopia. Those programs will cost trillions more. Such means many federal government programs may have to be slashed, and could negatively impact Americans everywhere.
Over the past 50 years, data shows the “real wages” of everyday working Americans in our economy has been a cause for concern. Average hourly earnings are currently at $23.24 per hour. This is the same as it was in 1973, when adjusted for inflation and other factors.
However, this often cited statistic is highly misleading, and it pays to look closer at the actual data instead of simply listening to selective talking points.
Liars always figure but figures never lie.
This perspective of flat wage growth highly depends on what year you choose to pick as your reference point. So, while it is true that real wages have remained virtually flat compared to 1973, since 1990, when real wages were only about $19 an hour, real wages have consistently grown to the present $23.24 average. That’s a 22% improvement in American workers wages in less than 30 years. And while that’s not a huge increase by any stretch of the imagination, the current trajectory is upward, and Americans economic lives are improving. Wages are not stagnant like many would have you believe. Instead “Main Street America” in consistently seeing real wage growth year after year in our growing economy.
So when Bernie Sanders and Elizabeth Warren say that only the uber rich are profiting from our economic growth, that’s simply not true. The rich may be profiting at a higher rate from all their investments on Wall Street, but Main Street America has been increasingly making more money just about every year for the past 30. And, all of this has happened without the help of Jimmy Hoffa type figures, with labor unions increasingly playing a smaller role in the American workforce.
America’s economy is far from a perfect one. There are a lot of very real problems we struggle with and causes for concern. There are very real people out there who are struggling in very real and sometimes catastrophic ways.
People need help, and they need them in very real ways.
But, I don’t believe the problems are as overblown as many popular presidential candidates would have you believe. In fact, many of them are outright lying about the extent of the problems our economy faces, and individuals like Bernie Sanders and Elizabeth Warren are exploiting a lot of people with a narrative that is highly misleading in their quest for power.
Far from an entire overhaul being required to make our nation a better country economically, it would seem if we are going to create better social safety nets, we need to do something far less dramatic than raising Jimmy Hoffa from the dead.