$100 Trillion Dollars in Debt!
On Good Friday (when most people were off, including most reporters) the Administration announced that the following Tuesday during Spring Break (when Congress was in recess and everyone's attention was focused elsewhere) the Social Security/Medicare Trustees annual report would be released.
Apparently someone isn't anxious for you to pay close attention to this year's report. The table below may explain why. The federal government has promised more than $100 trillion in benefits over and above expected taxes and premium payments!
PRESENT VALUE OF UNFUNDED LIABILITIES
|
Program |
75-Year |
Infinite Horizon |
|
Social Security |
$ 6.6 trillion |
$15.8 trillion |
|
Medicare Part A |
$12.7 trillion |
$34.7 trillion |
|
Medicare Part B |
$15.7 trillion |
$34.0 trillion |
|
Medicare Part D |
$ 7.9 trillion |
$17.2 trillion |
|
Total Medicare |
$36.3 trillion |
$85.9 trillion |
|
Total Medicare and Social Security |
$42.9 trillion |
$101.7 trillion |
*These calculations ignore the existence of the trust fund, estimated at a little more than $2 trillion.
Source: Social Security/Medicare Trustees Reports 2008
Read and weep.
We could cover these costs were it not for the profligate waste over the past 5 years in Iraq! David Florence Haiku Maui Hawaii
My ex-wife and I used to work for the branch of the US Treasury that writes the checks and keeps the overall books for the feds. My ex told me about a report we did on Social Security during the end of Clinton's first term of office. It basically said that if Congress and the President didn't stop spending the Social Security funds as part of the general fund immediately there would be no way of saving Social Security as it existed. Clinton's decision was to have the report destroyed. One of his big re-election selling points was he would have a balanced budget. If he didn't lump Social Security in with the general fund it would show that he couldn't get close to balancing the budget and could have ruined his chances for re-election. The report wasn't heard from again.
But Part D’s unfunded liability is down by $500 billion, from $8.4 trillion to $7.9 trillion.
The only difference between Stalinist Russia, Communist China that killed 100 million folks and America/Europe is that the former didn’t have the luxury of a ready made prospering capitalistic society to loot. Hence, genocide and terror were the only alternatives for deeply impoverished Russia and China under oppressive totalitarianism. America is rapidly approaching the point when there will be nothing left to loot for redistribution, at which point a more vigorous Stalinist police state will be imposed and planned genocide will become normal and desirable.
Once the government controls health care, the government will decide who lives and who dies; the “expensive to maintain” will be among the first victims.
Tragically for America, the only POTUS candidate who understands our future is Ron Paul. We have a currency that is approaching banana boat republic status, a trillion dollar a year interventionist foreign policy, a welfare state that is unsustainable in the short and long term, an economy that is outsourcing manufacturing jobs and delivering millions of Americans to entitlement dependent servitude, a corrupt government, the most punishing corporate tax in the industrialized world, and an emerging fascism that marries big business to big government (public private partnerships).
But, alas, Republicans love endless war and big corrupt government. Go figure.
Yes, very alarming…to us. But why not alarming enough for policymakers to force action?
The 1 year increase in unfunded obligations is $12 trillion (last year’s figure was $90 trillion).
Even under 75-year projections the debt increase over 1 year is $2 trillion. Saving $2 trillion should trump waiting around for the next President and Congress to arrive at their jobs. Heck, most of the congressmen/women are likely to be the same ones as now — given the power of incumbency.
I say lock’em up until they can figure out how to do entitlement reform.
I read the 2008 Trustees report and was interested to note that finances have actually *improved* since the 2007 report. So what do you mean by “read and weep”?
John,
Good graphic … a keeper, and I wish I’d had it yesterday!
How horrifying! Hope you can coach Mr. McCain on the true path.
John,
Thanks. How do you prosecute this as an issue? The only means by which we currently (as Senate Republicans) talk about this problem is via Sen. Gregg’s call for an entitlement commission. What other way can we make the point that the Democrats (or maybe us) refuse to engage on entitlements?
[Response to Bill Huges]
We are going to make some proposals. A good short-run reform would be along the lines of my Wall Street Journal article: http://online.wsj.com/article/SB120373015283387491.html
John,
It is quite clear that these grotesque numbers make certain assumptions that are unlikely to actually happen.
In the next 75 years our population will not grow as rapidly. We will constrain immigration radically, we will shift all manufacturing offshore, we will shift our expenditures more and more to the public sector from the private sector and they will ultimately be the only ones with health benefits because they will vote it for themselves and deny it to everyone else and lastly, if you get sick, you will die in the hospital from uncontrolled infections (the hospitals will, of course, only be staffed by aforementioned public sector employees). Thus you will not be a burden on the system….after you are gone….at least from a financial point of view.
The wealthy….and their gardeners…will have emigrated to Mexico….thus they will also not be a burden on the system….proving that the numbers for the unfunded liabilities are not as bad as the report would indicate.
DL
[Response to David L.]
Imaginative and funny. However the assumptions are quite conservative as I will explain in next Monday’s Alert.
I must be missing something.
When I calculate the PV of GDP over the next 75 years starting with $14T in 2008 and assuming a low 2% real GDP growth per year I get a result of $2,375T. This means that the 75-year PV of medicare and SS of $42.9T is just 1.8% of the PV of GDP over the same period. This is not an alarming number – it seems really low. What I am doing wrong?
Thanks,
Yevgeny
According to Al Franken, all that is needed is to raise taxes just like last time. The GNP is about $12 Trillion, should only take about 8 years at 100% taxation. :->
Absolutely pathetic.
John: thank you for the heads-up.
Hi, John,
Not to be a nit-picker, but strictly speaking, Parts B and D aren’t “unfunded.” The numbers you’ve provided indicate the NPV of all Part B and D expenditures, i.e., assuming zero revenues allocated to them. But currently we do fund both programs out of general revenues. So a fairer presentation of our situation is to assume we could continue to bankroll these programs at the same % of GDP that we do now, namely 1.31% for Part B and 0.38% for Part D. What’s “unfunded” is the difference between these amounts and what it will actually take to sustain these programs going forward, i.e., 2.4% of GDP on average to fully finance Part B over an infinite horizon and 1.5% for Part D. And to bring the result back to reality, I like to convert them into today’s dollars. Thus, even using the conservative calculation I’ve described, honestly funding both programs would have required us last year to devote the equivalent of $679 billion in real GDP terms (i.e., the actual amount would go up with GDP since it’s calculated as a percent of GDP etc.) to make up the difference. That helps me get a better perspective on just how large this hole is: my figure exceeds the amount the federal government spends on Medicare and Medicaid by more than $100 billion.
The one other figure I’d like to add to the mix is Medicaid, calculated in the equivalent fashion, since I’d prefer to focus on our health promises rather than contaminate the picture by throwing SS into the mix.
The other interesting number I’ve recently calculated is the overhead cost associated with all U.S. (F, S, L) tax-financed health expenditures, inclusive of collection and enforcement costs, compliance costs and the excess burden (deadweight losses) associated with the various taxes used to cover the $1.2 trillion in publicly financed expenditures (inclusive of about $250 billion in F,S,L tax expenditures that don’t show up in the National Health Expenditure Accounts picture of U.S. health spending). That figure turns out to be $475 billion. In short, in addition to what government “explicitly” funds, there is a massive hidden cost that literally is of the equivalent size of the future promises whose costs will eventually be borne by our progeny if we don’t act soon and the drag on the economy associated with the promises that are being funded today.
A fix for social security would be to have all candidates running for federal office to contrbute a minimumum of 50% of their collected campaign contributions to a social security lock box. Those that dont participate think more of themselves than the American people and should not be elected into office.
John,
You are a remarkable person. I can imagine you as a pest to those elected officials in Washington (a very large percentage of them) and you never go away. Keep reminding them about what they are doing to the future generations of this country — and to the drag on the current potential the country would be if run anywhere near what the Constitution contemplated.
My three sons are quite vocal about maters of Federal issues and politics — I hear about it from third parties sometimes too; a Pharmacist, an Engineer and a CPA, but they all lean hard on economic matters; they must have learned all of that after they left home.
If my numbers are correct, my family has a debt of about $7,200,000 for our portion of the present Unfunded Liabilities of Social Security and Medicare. That is for my wife and me and our children and grandchildren. Do we know what other Federal debt is out there in addition? And what will be added if these current candidates were to get as little as an additional 10% or 15% of what they are promising?
Thanks John, for what you do.
Over what period?
[Response to Richard Dudman]
Over the periods indicated above the columns of numbers – 75 years and indefinitely into the future, all discounted back to the present at the government’s borrowing rate.
3/08/2010
What if I can show you a $100 trillion dollar health care / mecical care and medican industry Tax forum per year through a split petition……the story and number are there.
To force pay into another system of failures within Health Care Insurance Groups.
This economy will not balance with this concept of a tax forum against the Health Care System. The issue of how to force pay into this system of Health Care may have worked but I am still troubled over the progressive tax forum within this Bill. It covers so many items and Countries that it only forces the system to adjust itself. In some areas, increases against the people and the troubled economy, and in other areas, less effects will be felt.
But this is my big problem, Government Officials seek help and they are to proud to ask us, “the true working force of Government.” It is understandable they have failed the People and within the United States Of America all we ask is to see us as who we are and not try to bring us into this world of the intellectual. I guess our Prime Directive is that of Star Trek, so it must be understood that for millions of people we are just as happy as can be making $13.00 per hour and we have no interest in this world of politics, and how to be a Enstine. Government Officials must understand that there is a level of people within different parts of this Country, that seek to be only that they find to make them happy.
As for this economy well, it is said that the U.S.A. Arms Division has created enough arsenal to destroy every last creature in the world 2 times over,built with tax dollars. This would be funny if not for the irony of it. And now as time has passed Government Officials keep failing. Before 9/11 all the way to today.
As it is in a world of a system, when employees continue to fail, one or two things happen, one; you get fired, two; if you see into a person a good, then it is political correct to implement a penalty or roll back in pay. But this implement of penalty is more favored in the course of action in the Federal Employment World. So how to fix the economy and unite it with the Health Care issue. It would be in the Countries best interest to implement a 10% per cent penalty against every State, County and Government Official within this Matrix of failures. Hey what is that old saying, what is good for the Goose is good for the Gander. I am serous about this, it is past due to show that our Government Officials they have failed, their system failure reaches into this world of warnings that they brush aside as if the information is not worthy noting. From Pearl Harbor to 9/11/2001 to 3/07/2010 of our tax system and Health Care Reform. This 10% per cent penalty should go into the Health Care Forum.
The big problem that Government Officials have is that they have no street credit. President Obama still has some but if he does not take his family and step away from these dueling Parties, that fight over this Health Care Dollar, and stand with Us he will lose all credit from the streets to the county.
President Obama, I would say to you, you have one last chance to regain the hopes and dreams of the American People. To reach out in a concept that states, if there is 250 million people in trouble because of these failures, I would give all my money to them and then I would say to all that I gave money to, “I have no money left, would you all please give me $1.00 back and then I would have $250. million dollars to start all over again.”
As for this $100,trillion dollar in site………….
Results 1 – 10 of about 685,000 for net worth of medicine development industry
Just to show how deep this Health Care Tax split petition reaches. The term split petition is used because of the Tax factor plan that is not seen because of the intent not to show a capital Taxing of close to a $100 trillion dollar package, a yearly system income, not profit…..
Some have stated that I clam to have spiritual in site or something of the sort. I assure you this is not true, so when I state that I asked God to help, it is my way of saying hey Bobby show me how to work on theses Chevy engines. But I do thank you for the consideration. Consider me a cross of Jethro Bodine from the Beverly Hill Billies with my 10th. Grade education and Vin Diesel from the move Pitch Black.
Henry Massingale
FASC Concepts in and for Pay It Forward
http://www.fascmovement.mysite.com on google, look for page 1 american dream official site