Part 8/12:
Rough calculations indicate that 20% unemployment in white-collar sectors could reduce federal income tax by approximately $1.2 trillion annually and increase government spending on unemployment benefits by around $680 billion. These shifts would add nearly $2 trillion annually to deficits, transforming the current $2 trillion deficit into a $4 trillion problem—a stark warning against complacency.
The Fallacy of Debt-to-GDP as a Sole Indicator
Traditional fiscal wisdom suggests that a high GDP can "buffer" high debt levels because the debt is measured relative to income. When GDP is strong, debt burdens seem manageable, and vice versa. However, this assumption falls apart in the face of AI-induced productivity collapse and widespread unemployment.