$62 Trillion and counting… Uncle Sam’s fantasyland

Flopping Aces ^ | 06-15-11 | Vince

[Starman417]

Dreams vs. fantasies. Dreams are a good thing to have. They inspire us. They generally have some connection with reality and are usually the kinds of things one can work at attaining or accomplishing. Fantasies on the other hand usually have very little connection with reality and even less likelihood of coming true. One might dream of making a million dollars or growing up to play for the Yankees, but one fantasizes about being Superman or achieving world peace.

With age, most of us begin to recognize that there is a difference between the two… So too is it with countries… or at least it does theoretically. Unfortunately, in America in 2011 the citizenry and their agents in Washington are still living in a fantasy world. The fantasy I’m talking about is government spending. And I’m not even talking about current spending… I’m talking about future spending, in the form of unfunded liabilities: Those promises the United States has made for which it has no money to pay, no ability to pay and no plan (realistic or otherwise) for how it will pay them.

At what point does a nation grow up? At what point does a citizenry demand that its representatives speak honestly and act rationally? How big does the stack of promises have to be? Is there some dollar threshold? If so, what is it? The late Senator Sen. Everett Dirksen is said to have uttered the following: “A billion here, a billion there, and pretty soon you're talking real money.” I wonder what the late Senator would say if he had knew how large Uncle Sam’s unfunded liabilities had become. In a universe where the GOP is talking about going to the mattresses over raising the debt ceiling by a couple trillion dollars, Senator Dirkson’s “real money” has become $62 Trillion of promises Uncle Sam has no way keeping!

That $62 Trillion overhang is more than twenty times the federal government’s $2.5 Trillion 2011 revenue – and four times our $14 Trillion GDP. To put this in some perspective, let’s imagine you earn $50,000 a year in salary but your annual expenses are $65,000. To make up the shortfall you borrow $15,000 a year from a distant uncle. Given that you are spending 30% more money than you earn every year, how are you going to fund the $1,000,000 college education you just promised your newborn baby? At some point your once rich uncle, to whom you now owe $150,000, is going to cut you off. Then what does junior do for college? Imagine how upset he will get when he turns 18 and finds out you broke the promise you reiterated to him every day of his life for two decades. Unable to pay, you go out and adopt a bunch of foster children and put them to work to pay for Junior’s education. Soon enough you’ve got a house full of angry young adults each wanting their educations. At some point the reality of their bleak situation sinks in and the kids organize themselves and throw you out of the house, take whatever money you had stored in the floorboards and maybe even find out if there is a place where they can sell you into slavery.

[DownInFlames]

If you throw in what the States unfunded liability owe, it is more like $120B.

[ClearCase_guy]

If I had my way
If I had my way in this wicked world
If I had my way
I would tear this old building down
— Rev Gary Davis

I say crash it. Crash the whole system. It cannot be fixed. We just have to start over. I now support Default.

[TGIAO]

I think Ben Franklin’s prophecy is now being fulfilled:

“In these sentiments, Sir, I agree to this Constitution, with all its faults, — if they are such; because I think a general Government necessary for us, and there is no form of government but what may be a blessing to the people, if well administered; and I believe, farther, that this is likely to be well administered for a course of years, and can only end in despotism, as other forms have done before it, when the people shall become so corrupted as to need despotic government, being incapable of any other.”
Speech to the Constitutional Convention (28 June 1787) Ben Franklin

[rokkitapps]

There is a dimensional element missing from the $62 trillion in unfunded promises - time. I don’t see any where in the original usa today article or the blog article about how far into the future the $62 trillion accounts for.

I mean, if the time period we are looking at is long enough, we have 1000 trillion in unfunded promises.

So is the 62 trillion for the next 5,10 or 100 years?