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When the federal deficit was reported as $1.5 trillion last year, that was real bad news. This year's $1.6 trillion deficit is also real bad.
But the truth is far worse. That $1.5 trillion figure consisted of what the government spent in excess of the revenue it took in, but it does not include any new unpaid liabilities the government accrued during the year. According to a USA Today analysis, the amount of new liabilities the government accumulated in 2010 is staggering:
The federal government's financial condition deteriorated rapidly last year, far beyond the $1.5 trillion in new debt taken on to finance the budget deficit, a USA TODAY analysis shows.
The government added $5.3 trillion in new financial obligations in 2010, largely for retirement programs such as Medicare and Social Security. That brings to a record $61.6 trillion the total of financial promises not paid for.
This gap between spending commitments and revenue last year equals more than one-third of the nation's gross domestic product.
Medicare alone took on $1.8 trillion in new liabilities, more than the record deficit prompting heated debate between Congress and the White House over lifting the debt ceiling.
Social Security added $1.4 trillion in obligations, partly reflecting longer life expectancies. Federal and military retirement programs added more to the financial hole, too.
The $5.3 trillion figure is the real 2010 deficit. Anyone still think we don't have a serious fiscal problem ???
Unlike the government, businesses are required to record liabilities when they are taken on. Companies can't accrue liabilities without reporting the loss to their shareholders, but that's exactly what the government does do. The government records no spending until it writes a check. This deceptive accounting trick allows the government to greatly distort it's financial situation, making things appear far better than they really are (and it's about as sad as it gets when a $1.5 trillion deficit is the optimistically distorted government spin).
A few posts back, I wrote about why we must address entitlements. That is reinforced here. You will notice that the Medicare and Social Security entitlement liabilities accumulated in 2010 come to $3.2 trillion. That greatly exceeds all the revenue the federal government received in 2010. Federal revenue was about $2 trillion.
The amount of the government's unfunded liabilities is a number so large that it's difficult to even get your mind around it. USA Today tried to put it in perspective:
The $61.6 trillion in unfunded obligations amounts to $527,000 per household. That's more than five times what Americans have borrowed for everything else — mortgages, car loans and other debt. It reflects the challenge as the number of retirees soars over the next 20 years and seniors try to collect on those spending promises.
I don't know about your household, but mine is going to have a very difficult time coming up with $527,000 to cover the government's promises, and I seriously doubt we have enough rich people in the country to cover them, as liberals would have us do. How are the wealthiest 2% supposed to pay for the other 98% ? Those numbers don't add up, especially when the wealthiest 2% are already bearing much of the tax burden. The bottom 47% pay nothing in income taxes.
Despite these ominous numbers, liberals keep their ideological heads buried firmly in the sand:
Michael Lind, policy director at the liberal New America Foundation's economic growth program, says there is no near-term crisis for federal retirement programs and that economic growth will make these programs more affordable.
"The false claim that Social Security and Medicare are about to bankrupt the United States has been repeated for decades by conservatives and libertarians who pretend that their ideological opposition to these successful and cost-effective programs is based on worries about the deficit," he says.
Notice that Mr. Lind offered NOTHING in the way of explaining how we will pay for all this, other than vague promises of "economic growth" that may or may not occur. That would have to be some kind of record economic growth to general an additional $527,000 per household. Color me skeptical.
USA Today points out one other important fact:
The government has promised pension and health benefits worth more than $700,000 per retired civil servant. The pension fund's key asset: federal IOUs.
Those federal IOU's mean YOU, Mr. and Mrs. Taxpayer. Here's an idea to partially address this situation - don't let government workers retire until they are 65, like the rest of us do.
If liberals get their way (and so far they are getting their way. Entitlements have done nothing but increase over the last 11 years, not to mention the last 75 years), we are going to see tax increases the like of which we've never seen before in this country. I used to say total taxes would have to double to pay for all the government's promises, but now I'm not sure even that would be enough. They might have to triple or quadruple. Imagine what that would do to Mr. Lind's assumed "economic growth". It would destroy it, thus requiring taxation to go higher yet, resulting in a neverending downward economic spiral.
That's why when I hear Democrats saying Republicans will "end Medicare as we know it", I think to myself "God, I sure as hell hope so", because spending $5 trillion above what the government takes in every year leads only to financial destruction, which does grave harm not only to seniors, but to all of us. Having wealthier senior citizens pay 30% more for health care insurance, as they would under Rep. Paul Ryan's plan, sure sounds preferable to tripling everyone's taxes, at least to me.
It would also be helpful if the Democrats offered a real solution of their own, but that hasn't happened. Someone will have to remind me again why I'm supposed to vote for Democrats, because I can't think of a reason when the Dems are punting on the most important economic issues of our lifetime. And liberals are not only punting, they are actually calling for MORE debt, like true crackheads. Then liberals turn around and disingenuously blame the Bush tax cuts, as if that extra $150-400 billion in revenue per year is going to solve the problem. What a demented joke that is.
I thank USA Today for pointing out the truth. It's about time somebody did.