Sunday, July 17, 2011

Tick, Tock, Tick, Tock

With both parties, still stuck in gridlock and no meaningful budget deal in sight, it is important to be reminded of some basic facts.  The U.S. Debt Clock is perhaps the clearest site out there with information on the perilous state of our national finances. Why? Because the numbers don't lie.  We often hear about how the national debt is now almost 100% of GDP. While strictly speaking that is true, it is also a misleading statement since it does not reflect the total liabilities associated with federal government "entitlements" (Medicare, Prescription Drugs and Social Security), the personal debts of Americans, and also omits the debts of state and local government. It is not a pretty picture. Here is how it out pencils out:

A. Unfunded Federal Obligations

1. Unfunded Medicare liability obligations: $80 trillion dollars
2. Unfunded Prescription drug obligations: $20 trillion dollars
3. Unfunded Social Security Obligations: $15 trillion dollars

Subtotal: $115 trillion

B. State and Local Government Debt

1. $3 trillion dollars

C. Private Debt

1. $16 trillion dollars

TOTAL Unfunded Federal Obligations, State and Local Government Debt and  Private Debt = $134 trillion dollars

As the debt clock reports, just on the current national debt of $14 trillion, the obligation translates to a burden to each American taxpayer of $130,000. But again, as staggering as that figure is, it is about one-tenth of "real debt" obligation of each American taxpayer, which comes to a surreal amount of over $1 million dollars per taxpayer.

Bold and courageous steps need to be taken, but based on the lack of leadership of both parties, it seems the proverbial "can is being kicked down the road" until at least 2012. That is unfortunate since real opportunities for reform and change exist.


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