50 Facts About the US Economy that will Shock You
We are down to the last five facts about the US economy that will shock you. These facts are reported by TEC economic blog. We are providing this information as food for thought:
46. If Bill Gates gave every single penny of his fortune to the U.S. government, it would only cover the U.S. budget deficit for about 15 days.
47. Amazingly, the U.S. government has now accumulated a total debt of 15 trillion dollars. When Barack Obama first took office the national debts was just 10.6 trillion dollars.
48. If the federal government began right at this moment to repay the U.S. national debt at a rate of one dollar per second, it would take over 440,000 years to pay off the national debt.
49. The U.S. national debt has been increasing by an average of more than 4 billion dollars per day since the beginning of the Obama administration.
50. During the Obama administration, the U.S. government has accumulated more debt than it did from the time that George Washington took office to the time that Bill Clinton took office.
Government Insiders: The True U.S. Debt Couldn't Be Paid Off Even If We Taxed All Income Over $66K by 100%
economicpolicyjournal.comThis post may be the most important post you read going into the new year, relative to how serious the U.S. government financial situation is.
Chris Cox is a former chairman of the House Republican Policy Committee and of the Securities and Exchange Commission. Bill Archer is a former chairman of the House Ways & Means Committee and is a senior policy adviser at PricewaterhouseCoopers LLP. In a recent op-ed at WSJ, they provide important insight into how big the U.S. debt problem really is.
They write:[…]the full extent of the problem has remained hidden from policy makers and the public because of less than transparent government financial statements. How else could responsible officials claim that Medicare and Social Security have the resources they need to fulfill their commitments for years to come?
For years, the government has gotten by without having to produce the kind of financial statements that are required of most significant for-profit and nonprofit enterprises. The U.S. Treasury “balance sheet” does list liabilities such as Treasury debt issued to the public, federal employee pensions, and post-retirement health benefits. But it does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations.
As a result, fiscal policy discussions generally focus on current-year budget deficits, the accumulated national debt, and the relationships between these two items and gross domestic product. We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal government’s true liabilities.[…]
The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.[…]As of the most recent Trustees’ report in April, the net present value of the unfunded liability of Medicare was $42.8 trillion. The comparable balance sheet liability for Social Security is $20.5 trillion[…]In theory, the Medicare and Social Security trust funds have at least some money to pay a portion of the bills that are coming due. In actuality, the cupboard is bare: 100% of the payroll taxes for these programs were spent in the same year they were collected.They then go on to make a very important point
I have been warning about for years:
In exchange for the payroll taxes that aren’t paid out in benefits to current retirees in any given year, the trust funds got nonmarketable Treasury debt. Now, as the baby boomers’ promised benefits swamp the payroll-tax collections from today’s workers, the government has to swap the trust funds’ nonmarketable securities for marketable Treasury debt. The Treasury will then have to sell not only this debt, but far more, in order to pay the benefits as they come due.
“Currently, state and local governments owe about $4 trillion in pension benefits that they do not have to current and former employees, and they know they cannot politically acquire it by raising taxes. This affects all 50 states. So the odds are that the states and [bankrupt cities] in America will go to the Obama administration and ask for free cash. And the president will no doubt find it for them. That "found" cash will be borrowed from the Federal Reserve and, like all of the federal government's debts to the Fed, will never be repaid. But countless generations of American taxpayers will make enormous and endless interest payments on it. Does that sound too apocalyptic for you? Well, consider this: The federal government is still paying interest on the $30 billion it borrowed to wage World War I nearly 100 years ago. ”
—Andrew Napolitano, “What Stockton’s Bankruptcy Means for the Rest of Us”
Emphasis added.
