The current porkulus package is just shy of $1 Trillion. Gosh, just a decade ago, we were hearing "a million here, a million there, pretty soon you're talking about real money." Obama isn't even proposing a whole trillion - just 8 or 9 tenths of one.
We have 300 million citizens in America. Go google "1 trillion divided by 300 million" and you'll see that this one little bitty trillion dollar package will cost every man, woman, and child in America $3300. The average family is about to add $10,000 to their debt load.
America has an unfunded liability - money we've borrowed from Social Security, promised Medicare benefits, and military/government pensions that haven't been funded - of about $40 Trillion. Our national debt is about $10 Trillion. We are $50 Trillion in the hole, and digging our debt grave ever deeper.
With $50 Trillion owed, every American owes $150,000. That is roughly half a million dollars per family. That's $150,000 per man, woman, child, bank executive, welfare recipient, student, dog trainer, social worker, engineer, and salesman. That's an average of $150,000 per person, but, truthfully, a huge population of Americans will never pay more than $5000 in taxes in their lives. The rich and middle class taxpayers will end up paying their own $450,000 per family, and then they will have to pay for one or two or a hundred other families' share of the debt. And, in the meantime, we'll be paying interest on the debt. Right now, $10 Trillion of the debt is owed to outsiders, and the other $40 Trillion is owed to Social Security beneficiaries and government retirees. As baby boomers age and retire, that unfunded liability will become an actual liability, and the government will have to borrow to pay out real dollars to retirees.
For every $1 Trillion borrowed, we owe $30 Billion a year in interest (at 3%) every year. Right now, we pay about $300 Billion in interest on government debt. If we don't find a way to reduce debt and pay off our liabilities, our yearly interest payments could grow to $1.5 Trillion in interest payments every year.
So to anyone complaining about the GOP holding up the stimulus bill, maybe you should thank your local obstructionist lawmaker. Or else put your money where your mouth is - send Obama a few thou to help "stimulate" the economy, and toss in a few extra thou to help break out of the debtor's prison the United States is building around ourselves.
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2 comments:
Can we regard future Medicare benefits as a loan/debt? Neither the service nor the payment for it has happened now, and benefit entitlements could be revised.
Same for pensions, for those who haven't started taking them.
Perhaps an accountant could explain?
Hi, Sackerson,
Every year, I set aside some money to pay my taxes. I know I have to pay my taxes, and I know that the government is unwilling to negotiate. It's not a loan, but it is a fixed obligation that I cannot avoid. If I fail to fund the obligation, it will become a debt when I pay the taxes on my credit card.
The government obligations are not yet debts, but they are owed as sure as my taxes are owed. The pensions are contractually obligated, and it would be extremely difficult for the government to evade paying them - unions are politically powerful and they have ample money to sue for enforcement of contracts.
Social security entitlements are easier to fudge, and the gov't has pushed back retirement ages already. But seniors/retirees are a politically organized, powerful group, and they have paid social security enough - or nearly enough - to fund their benefits. It's just that the government has stolen social security funds to pay current expenses.
Add on the fact that few Americans save sufficiently for retirement - my SIL had $5,000 at age 60 - and Social Security will be difficult to cut. Even a 50% cut - enough to put many retirees begging on the streets - would leave a shortfall in the tens of trillions, in an economy with only a $13 Trillion GDP.
Thank you for your comments.
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