The Great American Debt Angst
BY: NCViking
The feds are operating in some bizarro-world reality. By any logical consideration, the United States government is hopelessly broke. So what should we do? Audit the budget, make hard decisions and start saving? Nope. We need to add yet another expensive entitlement to the heap of debt, that’s what.
George W. Bush had an exceptional opportunity with budget surpluses and later with Republican majorities to really get our house in order. Instead, he and his allies pulled out the Pink AMEX and spent like a teenage girl on a shopping bender. Now, the same Democrats that ‘rightfully’ railed against this spending are now in power. So what do they do? Curtail spending? Employ fiscally-responsible policies? Heck no! If Republicans couldn’t resist the temptation to run up debt, Spendocrats will put on the poofy-pants and shell it out like Hammer! And that is exactly what is happening, much to the angst of the American people.
According to a report from the Washington Times, our on-the-books national debt is $11.6 trillion. But off-the-books federal debt, including Medicare and Social Security obligations, is $107 trillion, making for total debt obligations of $118 trillion. That is close to 10-times annual GDP or better yet, around 47-times annual federal tax receipts. Just the debt.
Let’s put it into household terms.
If a family making $75,000 a year had debt like this, it would be $3,520,000 … ugh! The projected budget deficit for this year is $1.8 trillion. That means our family would have an equivalent household budget of $129,000 for the year, a shortfall of $54,000. And now this family wants to purchase a health insurance policy that will cost them an additional $7,500 per year, so their budget would increase to $136,500, almost twice their income. This family would be absolutely, hopelessly and obviously bankrupt … but not the government. No, this is somehow not a big concern for our Spender-In-Chief and the other chargaholics in Congress.
Ooops … silly me, I forgot to mention that (to make it a fair comparison) our family has a big money printer down in their basement to help make ends meet.
Nice! Where can I get one?
I am just some goofy, hobby blogger and Finance was my worst collegiate subject (bor-ing for a Marketing major), but this absolutely defies logic on all levels. The average American sees this, senses this and is quite concerned. Thanks to the fiscally ruinous policies of this president and the previous one, the Great American Debt Angst is rearing its ugly head all over the nation in the form of Tax Day Tea Parties and Town Hall protests. This is what I believe to be the underlying foundation of this rising unrest, along with systemic political corruption, and ‘Let them eat cake’ elitism; all of which is a sure recipe for the voting booth guillotine.
L’argent est la racine de tous les maux!
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I love the Hammer reference. Thanks for that. I had the image of the poofy pants purged from my memory. Now I’m ruined for the rest of the day.
Your whole post is ruined by the French at the bottom. I am not from Quebec… I don’t understand.
Are you making fun of me?
Bottom line, this is not at all sustainable, and the “hard choices” that we are making are not hard at all.
Well balanced analysis. Let’s see if there is any disagreement out there…
Roughly translated: Money is the route of all evil.
I thought debt is the route of all evil. Money is the instrument.
I applaud your balance of including Bush in the problem. He raised the debt from $4T to $10T — more than all president’s combined, ever!
The math in your post does not make sense and it is likely to be incorrect. Also, the number of $107 T is exceptionally misleading (some would say irrationally alarmist).
The current debt of $11.6T is 5x the size of the current Federal income. Taking your analogy of a family making $75,000/yr, the debt is equivalent to the same family owing $375,000 – or 5x their current income.
You used the $107T (or $118T) number – misleading because it represents just the liabilities side of the ledger. I am not convinced that you actually understand (and are merely quoting) the number.
The current burn rate in the budget for these programs is $480B/yr. We know that the population is aging and that this number will grow, but it will not grow to $107 T.
If our Medicare and Soc Sec (MSS) costs were to go to $1T/yr, it would take 200+ years to reach that $107T , assuming no one ever paid any additional tax. If our MSS expenses reached $2T/yr, it would take 70+ years to reach $107T.
Here is the math. Our current expenses are paid by current taxes, so we’ll assume that $480B represents no additional debt as far as MSS outgo is concerned.
At $1T of MSS expenses, there would be a $520B/yr shortfall, so 107 div by 520 is 205 years.
At $2T of MSS expenses, there would be a $1.520B/yr shortfall, so 107 div by 1.520 is 70 years.
So $107T is not a real liability. It is an invented number that takes every living American, assigns to them a benefits factor and assumes no taxes are ever paid to their payout. That’s the only way to get to $107T.
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