“Enron Accounting” Has Bankrupted America: U.S. Deficit Really $202 Trillion, Kotlikoff Says
“Forget the official debt,” he tells Aaron in this clip. The “real” deficit – including non-budgetary items like unfunded liabilities of Medicare, Medicaid, Social Security and the defense budget – is actually $202 trillion, the professor and author calculates; or 15 times the “official” numbers.
“Congress has engaged in Enron accounting,” says Kotlikoff, who recently penned an op-ed for Bloomberg entitled: The U.S. Is Bankrupt and We Don’t Even Know It.
Yet, the debt market continues to have an insatiable appetite for U.S. Treasuries; heading into Monday’s session, the yield on the 30-year Treasury bond (which moves in opposition to its price) was at its lowest level since April 2009.
Kotlikoff says that’s because the market is focused on the “mole hill” of official debt. In time, the U.S. will have a major inflation problem to rival that of Germany’s post World War I Weimar Republic, he predicts. “We have to think about the fact that unless the government gets its fiscal act in order we’re going to have the government printing lots and lots money to pay these enormous bills that are coming due over time.”
THE $”ZILLION” PIT!
The unfunded liabilities run up by the U.S. government are estimated at anywhere from $100 trillion to over $200 trillion. While the estimates vary quite a bit, does it really matter? Nobody can even conceive of what it means to owe $100 trillion. In other words, it will be impossible for the government to keep its promises..
The biggest piece of the unfunded liabilities is Medicare. Then comes Social Security. There is also Medicaid and government worker pensions. These are the big ones. For now, I will just focus on Medicare and Social Security..
These unfunded liabilities keep growing every year. There is no way that the government can keep these promises over the next 75 years, let alone the next 20 years. There will be some kind of a default. Many libertarians assume that the default will come in the form of inflation. But that will not take care of the bulk of the problem..
If there is high inflation, then Social Security is supposed to be adjusted for a cost-of-living increase. It will not solve the Social Security problem, unless the government stops giving a COLA or redefines it. If that happens, then seniors will get checks that buy less and less..
It is even worse for Medicare. If there is high inflation, then medical costs will just continue to skyrocket. This will make it even harder for the government to keep its promises..
The easiest form of default will be to increase the retirement age substantially. If Congress raises the age to 75 overnight, then that will wipe out tens of trillions of unfunded liabilities immediately. Of course, Congress won’t do this. It will take smaller steps in defaulting on its promises..
The so-called entitlement spending, the military spending, and the interest on the debt are greater than the total tax collections. In other words, you could eliminate everything from the federal government except for those few things and the budget would still not be balanced..
In conclusion, there will be some kind of a default in regards to Medicare and Social Security. The main avenue of default will be through raising the age to collect. If you are in your 40?s or 50?s right now, don’t plan to retire in your 60?s, unless you have done a really good job of saving for yourself. If Ron Paul had received the Republican nomination, there might be some hope right now of making good on at least some of these promises. But it isn’t going to happen with the continuation of big spenders in office…
Financial disaster looms for America: $106 trillion in unfunded obligations mounting up over 30 years
(NaturalNews) Listen. Can you hear it?
It’s a steady, rumbling sound and it is gradually rising in intensity.
That is the sound of an approaching economic tsunami, one which will consume America and destroy her future.
It is faint now, but not too faint. It is distant – but not too distant.
It will be here before you know it. And when it arrives, it will ravage everything in its path.
Surely our elected leaders hear the rumbling too. How could they miss it?
And surely they are taking the matter seriously, because they aren’t really all-consumed with just the next election cycle. No, they truly do want what is best for the country, partisan politics aside, right? After all, they are Americans too, and they – like all of us – are in the path of this growing economic tsunami?
More money than the world has
The good news is at least some lawmakers are concerned about the enormous amount of money in benefits – $106 trillion within the next three decades – that past generations of congresses have promised Americans, in order to secure their votes and remain in power.
At least some lawmakers are aware that there simply isn’t enough money on the planet to pay those benefits, and are trying – though largely in vain, at the moment – to head off the approaching economic tsunami. But will it be too few – and too late? Is Washington’s culture of buying votes with the federal treasury too ingrained to alter course?
Sen. Ron Johnson, R-Wis., is one of the few. He and a group of Senate Republicans recently bypassed the Congressional Budget Office, which traditionally only projects budgets and spending out for a decade, and did their own 30-year project. What they came up with was economic Armageddon: $106,954,000,000,000 in the red, and that was the medium estimate (the range was a low of $72 trillion and a high of $120 trillion, as reported by National Review magazine).
27 Things Every American Should Know About The National Debt
The following are 27 things that every American should know about the national debt….
#1 It took more than 200 years for the U.S. national debt to reach 1 trillion dollars. In 1986, the U.S. national debt reached 2 trillion dollars. In 1992, the U.S. national debt reached 4 trillion dollars. In 2005, the U.S. national debt doubled again and reached 8 trillion dollars. Now the U.S. national debt is about to cross the 16 trillion dollar mark. How long can this kind of exponential growth go on?
#2 If the average interest rate on U.S. government debt rises to just 7 percent, the U.S. government will find itself spending more than a trillion dollars per year just on interest on the national debt.
#3 If right this moment you went out and started spending one dollar every single second, it would take you more than 31,000 years to spend one trillion dollars.
#4 Since Barack Obama entered the White House, the U.S. national debt has increased by an average of more than $64,000 per taxpayer.
#5 Barack Obama will become the first president to run deficits of more than a trillion dollars during each of his first four years in office.
#6 If you were alive when Jesus Christ was born and you spent one million dollars every single day since that point, you still would not have spent one trillion dollars by now.
#7 The U.S. national debt has increased by more than 1.6 trillion dollars since the Republicans took control of the U.S. House of Representatives. So far, this Congress has added more to the national debt than the first 97 Congresses combined.
#8 During the Obama administration, the U.S. government has accumulated more new debt than it did from the time that George Washington became president to the time that Bill Clinton became president.
#9 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 15 days.
#10 As Bill Whittle has shown, you could take every single penny that every American earns above $250,000 and it would only fund about 38 percent of the federal budget.
#11 Today, the government debt to GDP ratio in the United States is well over 100 percent.
#12 A recently revised IMF policy paper entitled “An Analysis of U.S. Fiscal and Generational Imbalances: Who Will Pay and How?” projects that U.S. government debt will rise to about 400 percent of GDP by the year 2050.
#13 The United States already has more government debt per capita than Greece, Portugal, Italy, Ireland or Spain does.
#14 At this point, the United States government is responsible for more than a third of all the government debt in the entire world.
#15 The amount of U.S. government debt held by foreigners is about 5 times larger than it was just a decade ago.
#16 The U.S. national debt is now more than 22 times larger than it was when Jimmy Carter became president.
#17 It is being projected that the U.S. national debt will surpass 23 trillion dollars in 2015.
#18 Mandatory federal spending surpassed total federal revenue for the first time ever in fiscal 2011. That was not supposed to happen until 50 years from now.
#19 Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debt soared by 61% during that same time period.
#20 The U.S. government has total assets of 2.7 trillion dollars and has total liabilities of 17.5 trillion dollars. The liabilities do not even count 4.7 trillion dollars of intragovernmental debt that is currently outstanding.
#21 U.S. households are now actually receiving more money directly from the U.S. government than they are paying to the government in taxes.
#22 The U.S. government is wasting your money on some of the stupidest things imaginable. For example, in 2011 the National Institutes of Health spent $592,527 on a study that sought to figure out once and for all why chimpanzees throw poop.
#23 If the federal government used GAAP accounting standards like publicly traded corporations do, the real federal budget deficit for last year would have been 5 trillion dollars instead of 1.3 trillion dollars.
#24 The Federal Reserve purchased approximately 61 percent of all government debt issued by the U.S. Treasury Department during 2011.
#25 At this point, the U.S. national debt is more than 5000 times larger than it was when the Federal Reserve was first created.
#26 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 480,000 years to completely pay off the national debt.
#27 The official government debt figure does not even account for massive unfunded liabilities that the U.S. government will be hit with in the years ahead. According to Professor Laurence J. Kotlikoff, the U.S. government is facing a future “fiscal gap” of more than 200 trillion dollars.
US Debt Clock – http://www.usdebtclock.org/