I lamented the election of an outright socialist (Zapatero) as leader of Spain when it happened (in 2004, and again in 2008), and indeed he did nothing to fix the problems with unfunded entitlement liabilities in Spain.
Investors Business Daily explains what happened:
Spain is dangling on the edge of a very dangerous fiscal precipice. Not only is its government budget still deep in the red, but its social security fund is about to completely run out of money. Once that happens, the real fun begins.
As recent reports note, Spain’s social security fund will run out of money sometime in 2018. The reason? “Bonus payments” to pensioners, similar to expansions in Social Security benefits for current retirees and women that Hillary Clinton seeks to put in place in the U.S. Unless the Spanish government finds the money to patch the coming social security blowout, deep cuts in benefits or steep rises in taxes will have to be made.
And this is a problem that won’t just go away with improvement in the business cycle. “The financial problems are not a temporary problem,” noted Spain’s El Confidencial newspaper, as translated by financial advisor and blogger Michael Shedlock. “Revenue from social security contributions is not sufficient to meet payment obligations.”
How bad is it? Well, so far this year there’s a 12.24% deficit in social security contributions vs. the forecast. That gap will likely worsen in coming years, as more workers opt for retirement and fewer people enter the workforce. Payments to some people already deep in retirement may have to be cut — adding to the already disruptive fiscal chaos that has roiled Spain, despite its rebound from the financial crisis.
We have a similar problem in the United States, thanks to the Democrats. A long time ago, the Democrats created a Ponzi scheme called Social Security in order to buy votes of retirees today with money to be paid by younger American workers tomorrow. There is no Social Security fund, just buying the votes of one group of voters with the votes of a much less politically-aware group of voters (young people).
The same IBD article assessed the American system, as well:
By 2034, the U.S. Social Security program, too, will be bankrupt. We have one edge on Spain: We can print our own money. But as we’ve found over the past eight years of quantitative easing, that doesn’t exactly solve the problem. And anyway, while inflation is virtually zero today, there’s no guarantee it will be the same in 18 years.
[…]Today, the total unfunded liability of the U.S. Social Security program is in excess of $25 trillion. There are already 60 million Social Security recipients, with some 10,000 baby boomers retiring each and every day. Three out of five current retirees depend on Social Security for their income. Knowing this reckoning is coming and doing nothing is malfeasance of the worst sort.
In Spain, there is so little free market capitalism that young people cannot even find jobs. The unemployment rate for youth in Spain is second only to Greece – the same Greece that elected the socialists for decades. So young people cannot find work in either Greece or Spain. If the young people cannot pay into these systems at the same rate that people did in the past, that just makes them go bankrupt faster.
Millennials, take note. When you vote Democrat, you are voting to pay some of what you earn into a system that will not be there for you when you retire. I have paid into it, and it will be bankrupt long before I retire. And the Democrats are importing more takers (unskilled illegal immigrants, Syrian refugees, elderly family members, etc.) who will be taking more out of the system than they pay into the system. You are making yourselves into slaves because of your gullibility, listening to the lies that your teachers and professors tell you about who to vote for. Think for yourself.
The wonderful thing about having other countries is that you can look at them and see what happens when they implement different laws and policies. Socialism – of the sort championed by the Democrat party in America – has already been tried. It’s been tried in Greece, it’s been tried in North Korea, it’s been tried in Cuba, and in Spain. It’s not working anywhere. It’s not working here, either.