The above four multi-trillion-dollar liability balls are staggering in their implications. Remember first of all that the nearly $65 trillion of entitlement liabilities shown above are not some estimate of future spending. They are the discounted net present value of current spending should it continue at the projected demographic rate (importantly ”“ it is much higher than the annual CPI + 1% used as a discounter because demand for healthcare rises much faster than inflation.) And while some Honorable Congressional Le Pews would counter that Medicaid is appropriated annually and therefore requires no discounted reserve, those words would surely count as “sweet nothings,” believable only to those whom they romance every several years at the polls. The incredible reality is that the $9.1 trillion federal debt that constitutes the next-to-tiniest ball in our chart is nothing compared to unfunded Medicaid and Medicare. It is like comparing Pluto to Saturn and Jupiter. The former (the $9.1 trillion current Treasury debt) does not even merit planetary status in our solar system of discounted future liabilities. It’s really just a large asteroid.
Look at it another way and our dire situation becomes equally revealing. Suppose that the $65 trillion of entitlement liabilities were fully funded in a “lockbox,” much like Social Security is falsely imagined to be. Just suppose. And say the cost of that funding (Treasury debt) was the same CPI + 1% that was used to produce the above discounted present value in the first place. Actually, that’s not a bad guesstimate for the average yield of all Treasury debt. If so, then the interest expense on the $75 trillion total debt would equal $2.6 trillion, quite close to the current level of entitlement spending for Social Security, Medicare and Medicaid. What do we pay now in interest? About $250 billion. Our annual “lockbox” tab would rise by $2.35 trillion and our deficit would be close to 15% of GDP! The simple conclusion would be this: Unless you want to drastically reduce entitlement spending or heaven forbid raise taxes, then Pepé, you’ve got a stinker of a problem.
Things will be even worse than the article indicates. The sole focus
of the piece was on federal funding of entitlements, esp.
Social Security. What about the grossly underfunded state
pension obligations? Both the feds and the states will seek to reach
ever more deeply into our pockets. With the Democrats being mere shills
for public employee unions, we can expect massive flows of money
(= power) to public sector unions and their members. It will then be
the government of the “public servants”, by the “public servants”,
and for the “public servants”. True power in this country will be
held by union officials unelected by the electorate at large. Any
notion of power residing with “We The People” will be forever
extinguished.
Currently federal debt alone is costing $48,000 per second, interest only. Schumer calls the tiny proposed cuts extreme. They amount to less than 0.2% of the $14,000,000,000,000 debt.
I now know what Jesus meant by legalism, or the pharisees who were the rules followers. We have the idiocy of sarbanes oxley and other rules meant to protect the public monies. The rules are a waste of time and money – takes 10 times the effort to make small changes to our billing that previously we could accomplish in minutes. With all of those rules – we are $14T IN DEBT. Wait until the Scott Brown, Barney Frank, Chris Dodd blanket of regulations is implemented on Wall Street, wait until health care !!!!!
Why are they doing this to us and our children? I cannot sleep at night. They will pay, as will we pay, but their punishment will come from an even higher source for their enslavement of us and our children.