President Obama and the Treasury Department are demanding that Congress raise the $16.9 trillion (and counting) debt ceiling so that the government can continue borrowing in order to pay its current obligations before the October 17 deadline. However, $16.9 trillion is a fraction of the total national debt owed by our government.
Missing from the discussion about raising the limit on the government’s credit card are trillions in unfunded liabilities that the United States of America simply will not ever be able to pay.
As I explained in a previous column, unfunded liabilities are payments the government knows it owes in the future, including the future costs of Medicare, Social Security, and the prescription drugs of Medicare Part D. As of this writing, the U.S. Debt Clock website estimates our unfunded liabilities to be $126 trillion. If you click on the site’s “Debt Clock Time Machine” in the upper right corner, you can get a glimpse of the future. Right now, our unfunded liabilities in 2017 will reach $154 trillion.
Amazing as it seems (and no private firm would ever contemplate such deceitful accounting), these trillions in unfunded liabilities are not itemized on the current U.S. Treasury balance sheet. However, due to a demographic bulge comprising 28% of the total U.S. population now reaching retirement, these mounting “unfunded” obligations can no longer be ignored. The first crop of post-war children from 1946 began turning 65 in 2011 at the rate of 10,000 a day. This pace will continue until 2029, when the last group of boomers born in 1964 turn 65.
Our government will struggle to generate enough tax revenue to pay for what is owed and promised, but 76 million rapidly aging baby boomers overwhelm the number of younger workers paying into the system. Eventually, between the interest on the debt and the benefit payments themselves, there will be no money left in the federal budget for anything else.
Here is what the Congressional Budget Office (CBO) wrote in its 2013 Long-Term Budget Outlook report released on September 17:
Choices for the Future
The unsustainable nature of the federal government’s current tax and spending policies presents lawmakers and the public with difficult choices. Unless substantial changes are made to the major health care programs and Social Security, those programs will absorb a much larger share of the economy’s total output in the future than they have in the past.
Yet the phrase “unsustainable nature” isn’t heard often from our current administration and media. This climate could lead to our national “demise” because Medicare, Medicare Part D, and Social Security are not going to change. Whenever there is talk of reforming these programs, a national outcry follows.
But $222 trillion in debt can’t simply be worked around. Will our commentariat and government officials ever discuss our current federal budget in terms of unfunded liabilities? Fear of being honest with the American people, especially baby boomers who have paid into these programs for decades, may be the concern. Or perhaps they simply think there will somehow be enough money to make good on the benefits promised.
Millions of Americans born in the 1930s and early 1940s are also living longer than expected. For example, my father-in-law, born in 1922, at age 91 is still receiving a hefty monthly pension from that “secret” government agency he retired from in the 1970s.
America simply must begin discussing our financial outlook in terms of our cataclysmic unfunded liabilities. Perhaps if the truth were out, it would supply the political motivation needed to inflict radical change upon these nation-destroying benefit programs. During the next few weeks, as you hear politicking about raising the debt ceiling from $16.7 trillion to about $20 trillion, be aware that you are hearing only of “government-style” accounting, covering only a small fraction of the national debt.