Posted on 09/20/2010 9:06:03 AM PDT by Painesright
How bad is the nation's debt problem?
While the official number -- $13.4 trillion, according to the Congressional Budget Office -- is frightening enough, some analysts say the actual figure is much, much higher. Like a shopaholic who hides their credit card bills, the government pretends certain obligations and expenditures don't exist. Uncle Sam really owes closer to $60 trillion, or more, and the country is close to bankrupcy.
"The government is lying about the amount of debt," says Laurence Kotlikoff, an economist at Boston University and co-author of "The Coming Generational Storm: What You Need to Know about America's Economic Future." "It is engaging in Enron accounting."
"The problem is we're seeing an explosion in spending," adds Andrew Moylan, director of government affairs for the National Taxpayers Union.
In 1980, the debt, the accumulated red ink incurred by the federal government, was $909 billion. This represented some 33 percent of gross domestic product, says the Congressional Budget Office (CBO).
Thirty years later, based on this year's second-quarter numbers, the CBO said the debt was $13.4 trillion, or 92 percent of GDP. The CBO estimates the debt will be at $16.5 trillion in two years, or 100.6 percent of GDP.
But these numbers are incomplete. They do not count off-budget obligations such as required spending for Social Security and Medicare. Those programs represent a balloon payment for the government as more Americans retire and collect benefits.
(Excerpt) Read more at nypost.com ...
One trillion (just ONE) is $1 per second for 32,000 years.
The Bible says that debt is slavery. The borrower is the slave of the lender. If these numbers are accurate we need explosive economic growth or we will be debt slaves in our later years and our children will be debt slaves for their entire lives. The time to change is now.
When you put it that way it doesn't sound too bad. ;o)
A large percentage of Americans don't really care about the National Debt. 47% of Americans don't pay taxes and don't understand the associated problems caused by government debt.
Should we examing the nation’s P&L statements?
Consolidated Statement Federal, State and Local Government
Assets:
Present Value of current US tax system: $3.74 trillion/4% = $93.5 trillion
Government Land and Structures: $10 trillion
Private Sector Financial Assets: $3.6 trillion
Social Security Trust Fund: $2.5 trillion
Market Value of Federal Reserve System: $45 billion(’09 profit)/.04= $1.1 trillion
US Military’s overseas bases, military hardware equipment, and Federal patents: $5 trillion
Total US Government Assets: $115.7 trillion
Liabilities:
Current Federal, State, and Local obligations: $11.9 trillion
Social Security Trust Fund: $2.5 trillion
Total Liabilities: $14.4 trillion
Net worth: $101.3 trillion
Liabilities/Total Assets = 12.4%
The government can of course increase taxes at will to boost its tax revenues and assets...
Other liabilities including medicare , medicaid etc it has no Constitutional obligation to pay, and the government makes its own law so they have no legal obligation either. As such they would not appear on any corporate balance sheet, and in all likelihood will never be paid..
Off balance sheet assets: US Private Sector Assets, non-government assets available for taxation: $67.8 trillion...
I’ve seen/heard estimates, including unfunded liabilities, of anywhere from $50 trillion up to $200 trillion, depending on what it includes and the variables used to calculate it. My view is, whether it’s $50 or $200 trillion really isn’t the point. The point is our government has spent this nation into bankruptcy, and all that’s left for it to come to a head is a catalyst event that causes a tipping point in loss of confidence in the fiat dollar’s real value. When that happens, there will be much wailing and gnashing of teeth as we dive into a hyperinflationary collapse. The time to prepare for it is now, not later.
I believe we owe more money than exists in the world. In short, we’re broke.
I believe we owe more money than exists in the world. In short, we’re broke.
-OR- 1,000,000 MILLION... not 10,000 million BUT 1,000,000 MILLION..
No one knows the extent of US government indebtedness because the taxpayers are on the hook for Fannie and Freddie, and no one knows the extent of their liabilities.
Unfunded liabilities are not the same as debt.
Compound interest accrues on debt; but not on unfunded liabilities. When interest payments can no longer be met; you’ve past the point of no return.
Governments have many ways to shed the liability for unfunded liabilities. So long as they avoid shafting too many people with guns, they can do so with impunity.
I’m not suggesting that unfunded liabilities aren’t a serious issue — just that it’s important to clearly define problems, if you actually want to solve them.
The only upside is that almost all of this is owed to ourselves.
Those items are not "debt" as I would categorize them. I realize it's a tall order for anyone to expect the U.S. government to scale these programs back, but calling these obligations "debt" is like telling young parents that it will cost $350,000 per year to send their child to college in 18 years.
The parents simply say: "If college costs that much, then we ain't buying it."
True, but can't you (kind of) say that inflation accrues on unfunded liabilities? They take $100 from my check today and give me back less (in inflation adjusted dollars) when I retire.
A better upside would be if all of this was owed to someone else. When you owe that much money to someone, they are at your mercy.
Note the different treatment given to a homeowner with a $200,000 mortgage vs. a business with a $200 million debt to the same bank. The bank owns the home with the $200,000 mortgage . . . but the business with the $200 million debt owns the bank.
We must have money somewhere because I just read another article about us sending even MORE money to Pakistan for the weather cleanup. The Pakistani people don’t want their taxes increased and figured that the U.S. will come up with the money if they want use to continue their help with the war....can you believe that????? I would love the U.S. to say FU!!!
Your point is valid about a parent being able to make a decision not to send his child to college if the cost is too high.
However, an 18 year old has a lot more options than a 65 year old. The 18 year old can decide to go to a less expensive school or go into a trade that does not require a college degree.
The 65 year old who hasn’t saved up enough money to support themselves in retirement and is counting on the gov’t to pay for a large part of his living expenses as well as expensive medical treatments for 30 - 35 years until he dies is not in the same boat as an 18 year old.
Is the gov’t just going to say “If Social Security/Medicaid/Medicare costs that much, we ain’t paying it?”
A new report just came out that “conservatively” estimates that Americans who are getting ready to retire have under-saved by $6 trillion.
American consumers now owe around $13.5 trillion in residential mortgage debt and other consumer related debts. (That number was less than $500 billion in 1975)
Private and public pensions are underfunded to the tune of trillions.
These debt numbers, both private debt and public debt, are terrifying.
The gov’t has overpromised and most Americans have undersaved and overspent... to the tune of many trillions.
Here’s an interesting question to ponder... I heard the other day that the echo-boomer generation (now 18 - 30 yrs old) is one and a half times bigger than the baby boomer generation.
How is the competition in the job market going to play out when all of those echo-boomers are looking for a job and all of the underfunded baby boomers are back in the workforce looking for a job?
It really gets interesting when you think about the fact that we have killed the goose that lays the golden egg in America: industry.
We sent our jobs overseas due to a complicated, punishing tax code, too many regulations and too many law suits... not to mention a dumbed-down public school system.
I wonder how all of that will play out?
Boy, these are depressing things to discuss on a Monday!
So long as the ratio of payers to dependents was about equal (and so long as earnings at least kept up with inflation); there was no apparent problem with these pay-as-you-go social programs. Unfortunately, the fuse on the demographic bomb has already been lit. There will soon be many more dependents than payers. At that point, expect the payers to rebel, and the system to collapse.
Meanwhile; you can take some comfort in the fact that these unfunded liabilities aren't accruing compound interest. If they were, the U.S. would have been bankrupt a couple of decades ago.
Is the gov’t just going to say “If Social Security/Medicaid/Medicare costs that much, we ain’t paying it?”
That's exactly what's going to happen. You already saw the first steps in that direction in just the last 12-18 months -- with the Obama administration's decisions to: (1) "temporarily" suspend cost-of-living increases in Social Security benefits, and (2) include Medicare cuts in the health care bill that was just passed this year.
The realities of an aging population are starting to hit home, and I'm not sure the end is going to be very pretty. We may well end up in a situation some years down the road when this country's "abortion survivors" kill off their parents and their grandparents.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.