US National Debt – 5 Times Greater Than The Government Admits
The IOU that’s being laid on the doorsteps of U.S. taxpayers in the form of the national debt is far greater than most Americans realize.
For those who have gotten lost in the sea of numbers — and who can blame you — here’s a few to simplify the issue and illuminate the full extent of the nation’s debt load:
At last count, the national debt was about $15.7 trillion, according a Treasury statement released on June 11 this year. That works out to about $50,100 for each of the 313 million residents in the country.
Factor in all of the federal government’s debt obligations — money that it owes to cover expenses related to Medicare, Social Security, Treasury securities and bonds issued by government-sponsored agencies like Fannie Mae, Freddie Mac and Ginnie Mae — and the national debt balloons to $79.2 trillion — a figure you’ll never hear government agencies utter. That means a baby born today in the world’s richest economy begins her life with a virtual debt burden of about $253,000.
The biggest part of the undisclosed national debt is Medicare, a program that includes $38.6 trillion in promised future benefits that exist currently as unfunded liabilities, according to a recent Medicare Trustee report.
One of the costly features of the Medicare deficit is the prescription drug benefit, an outpatient program enacted by the Medicare Modernization Act after Republican Pres. George W. Bush signed it into law in 2003. The drug benefit has churned out liabilities of $7 trillion — which remain off the government’s balance sheet. A large portion of the remaining $31 trillion comprises costs of funding Medicare hospital coverage shortfalls, over the next 75 years.
“Health care costs are growing faster than the economy. We’re not sure how to control that,” said Susan Irwing, director for Federal Budget Analysts at the Government Accountability Office.
Employer and employee tax revenues, which are struggling to keep pace with rising costs and an aging population, are exacerbating the Medicare shortfall.
“Congress produces 10-year budget projections, which do not provide a full picture of Medicare costs in terms of their long-term trajectory,” said Josh Gordon, a policy director at Concord Coalition, a nonpartisan fiscal policy organization founded by the late Sen. Paul Tsongas (D-Mass).
“If the current path continues, the hit to the GDP will be so large that it will knock the economy back into a recession,” Gordon added. “But elected officials probably won’t make this a priority until after the elections.”
Social security programs like pension and insurance schemes face unfunded benefit payments of $8.6 trillion over the period 2012-2086, according to the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds. The government is legally barred from using general tax revenues to pay for these benefits.
“These (liabilities) are not included in the government’s annual balance sheet because they come from government spending programs, which the Congress could modify every year,” said Marc Goldwein, a policy director at the Committee for a Responsible Federal Budget (CRFB), another nonpartisan fiscal policy analysis group. “They aren’t legal obligations.”