Posted on 10/05/2008 6:34:26 PM PDT by uncommonsense
Official debt versus real obligations. The official federal debt is some $9.5 trillion, of which about $5.3 trillion is held by the investing public and $4.2 trillion is held in government accounts such as the Social Security and Medicare trust funds.
But the official liabilities pale in comparison with the off-book entitlements — obligations to pay current and future Social Security, Medicare and Medicaid benefits.
Unfortunately, there is a gigantic gap between the value of future tax collections and the value of future entitlement payments. Economists call this the fiscal gap: the present value difference between the government's projected future spending and its future tax receipts.
The U.S. Treasury actually calculated this figure in 2002 when Paul O'Neill was running the shop. It was $45 trillion. No one learned this because O'Neill was fired before he could disclose it in the 2003 president's budget.
The Clinton administration censored a similar study in its first term after it had been carefully prepared by the Office of Management and Budget. Today, while Democrats decry the Republican administration for failing to foster reforms for Fannie Mae and Freddie Mac, they have conveniently forgotten their opposition to reform when it was proposed in 2003.
Today, things are worse. The passage of Medicare Part D alone has added about $8 trillion in unfunded liabilities. To put that in perspective, the expected cost of providing pills for seniors is right in the ballpark with the unfunded liabilities of the entire Social Security retirement program. Today the fiscal gap is near $70 trillion.
The $70 trillion fiscal gap is the real measure of our government's indebtedness. To put the figure in perspective, the Federal Reserve recently reckoned the net worth of every household in America at a mere $56 trillion.
(Excerpt) Read more at statesman.com ...
bump flr
That’s right. Factor in Medicare, Medicaid and SS and it’s staggering.
We’re going to have to hyperinflate. I don’t see another choice, except for maybe world war.
The common sense answer, abolishing the Fed, severely cutting spending and going to a sound monetary policy, isn’t even on the radar screen.
Don’t be fooled. The spin that Wall Street was at fault is mainly BS. Wall Street has some blame but much of Wall Street was devastated.
Fannie and Freddie caused this along with CRA and community activists. This was also a conspiracy by hedge funds working in tandem with you know who.
I just read the first part of the story and it is Washington that is the problem not Wall Street. It does not even mention Wall Street. You are being lied to people. Fannie and Freddie were 99% of the problem.
I just read the first part of the story and it is Washington that is the problem not Wall Street. It does not even mention Wall Street. You are being lied to people. Fannie and Freddie were 99% of the problem.
I just read the first part of the story and it is Washington that is the problem not Wall Street. It does not even mention Wall Street. You are being lied to people. Fannie and Freddie were 99% of the problem.
So, we will continue to raise taxes, slow down economically, and eventually inflate these debts away. By then, today's young, will have been so conditioned, they will be passive like Russian pensioners.
Republicans will never have the sack, nor pay the price to fight this. They will try to 'grow' our way out. So look for more immigration to 'grow' the 'population and wealth' and spread the debt over more people.
I could see a union between Mexico and the US. By then both countries should be basket cases like any of the basket case banks we see today. There will be a whole pro business patter of how we are just one people anyways. The Dems will like the political calculus of more poor people.
Come to think of it, we could ride this horse, the US, into the ground for the next forty years if played right.
Presidents and Congresses have not wanted to deal with this.
President Reagan and Congress “saved” Social Security in 1983 with a package of changes. Included were tax increases, and delaying the full retirement age for baby boom age retirees. Supposedly the system was saved for the next 75 years.
Unfortunately, while contributions to the Social Security trust fund have been greater than has been needed in recent years to pay benefits to retirees, the excess contributions were lent to the federal government to fund ongoing spending.
And other presidents, including Clinton and Bush 43, have made major speeches dealing with plans for the future security of the Social Security system. But it’s been all talk and no action. It’s been known for many years that Social Security and Medicare were going broke, but it’s always been far enough into the future that action has not happened.
The political will to balance the budget of Social Security has not been there. Heck the political will to balance the budget of the general fund of the federal government hasn’t been there either.
Since Soc. Security is the 3rd rail of politics, will anything realistically happen until the fund is unable to issue checks without an act of Congress, similar to this emergency Wall Street legislation to help the financial markets? Will “President” Obama let things go to pot on his watch? It could well happen on his watch.............
Thank God I’m a federal employee with a federal pension and federally-funded health insurance!
A new drinking game. Everytime a Freeper says he needs a drink, we all take a drink.
Isn’t the Feds borrowing from your pension fund?
I'm curious (not being financially savvy) just how many people in the U.S. are on SSI? If there are say 200 million senior citizens on SSI and a deposit of $1 million was in their account...that would only total $200 million dollars and they could live off interest alone. $1 million dollars per SSI recipient would allow them to also purchase high-deductible health insurance and then have a health savings account to deposit as interest income comes in to be used to pay normal doctor bills, medicine and everything that is not a hospital stay or operation.
I saw John Stossel talk about the money going in to SSI, Medicaid and Medicare and he pointed out that eliminating the government bureaucracy could just cut a check to everyone in the system for more than enough to live on and have health care.
It just seems that 'trillions' seems way to high of a ratio of money-to-number of people. Am I wrong?
bump
There in no money in an account. It gets thrown into the general fund and spent long before it’s ever even collected.
We’ve been into deficit spending for decade upon decade. The Ponzi scheme known as SS is not working and never will. It’s mathematically impossible, unless we have massive population reduction among recipients.
wow ... just wow.
I watched the video of that ex-KGB guy from 1985. "Reduction among recipients" can easily be achieved: euthanasia of the elderly and the disabled. Obama and a 'super-majority' of Liberal-Democrats could get that passed. It would be our 'patriotic duty' to get out of the way...
This whole debt, deficit in the trillions and all...does it not just come down to numbers? What if the debt and deficit cannot be paid and it grows to hundreds of trillions. Are we totally cooked or can we just zero it all out and restart? Sort of like a format the financial hard drive, reinstall and re-boot the financial system? I know that is simplistic, but can a whole nation shut down financially and go out of existence? OR would it re-boot on some new sort of monetary or barter system?
We’re ALL federal employees, etc. now.
The $70 trillion fiscal gap is the real measure of our government’s indebtedness. To put the figure in perspective, the Federal Reserve recently reckoned the net worth of every household in America at a mere $56 trillion.
But we keep electing incompetents and crooks into office and there is no leadership anywhere to be found in either party. Are we witnessing the fall of the American empire?
By the way, when was the last congressional pay raise? Shouldn’t they be due for one soon or is it automatic?
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