It’s the end of the world as we know it and I feel fine. Or so said R.E.M. At least they had the courtesy to turn their apocalyptic predictions into a catchy tune. Unfortunately, we weren’t so lucky in 2011, when Harold Camping incorrectly predicted (twice, we might add) the end of the world based on his flawed reading of the Bible.
But if you grew weary of 2011’s doomsday talk, brace yourself for 2012, the year the Mayan’s famed calendar runs out. Heck, Hollywood was so excited about this particular end-of-the-world prediction that they already made a movie entitled 2012…back in 2009.
Although we’ll have to wait until next December to see if the Mayan’s were right, it’s pretty clear that the United States government has already bought into the theory. After all, if it’s the end of the world, there’s really no need to focus on fiscal discipline. It’ll be tough for China and our other creditors to collect in the afterlife.
But seriously, end of the world or not, America’s budgetary troubles are pretty apocalyptic. The national debt, the number most widely known amongst Americans and cited by politicians, has reached an astounding $15 trillion. Pretty scary.
Except that isn’t even the worst of it. Economist Bruce Bartlett explains in today’s New York Times:
“The national debt, which is the object of almost obsessive attention these days, is like a bank loan. It is an important part of national indebtedness, but only a small part. The vast bulk of the true debt is in the form of commitments to pay future benefits to retired federal employees, veterans, and Social Security and Medicare beneficiaries.”
Unlike private companies, prior to the 1950s the federal government did not even have to keep track, much less publish, these numbers. Fortunately, they do today, in the aptly (though blandly) titled “Financial Report of the United States Government.”
It’s possibly the most important document that you’ve likely never heard of. And that’s just the way the Obama Administration wants to keep it. This year the report was released on December 23rd, just two days prior to Christmas, when politics (hopefully) was the last thing on America’s collective minds. Outside of the deepest darkest recesses of the internet, few even knew the thing was published, much less took the time to pour through its 254 pages of mind-nubbing jargon and charts.
Having now perused a good bit of it, let me say that the numbers were sure worth hiding. Bartlett breaks them down in his column:
“According to the report, the federal debt – simply the cumulative value of all past budget deficits less surpluses – was $10.2 trillion on September 30th. But the government also owed $5.8 trillion to federal employees and veterans. Social Security’s unfunded liability – promises benefits over expected Social Security revenues – was $9.2 trillion over 75 years, or about 1 percent of the gross domestic product. Medicare’s unfunded liability was $24.6 trillion, or 3 percent of GDP.”
For those of you without calculators handy that adds up to $51.3 trillion, or approximately the ENTIRE net worth of America’s households. That’s an enormous problem, made worse by the fact that the current President doesn’t appear to care and the Democratic Senate is happy to join in the obstinacy.
This head-in-the-sand mentality will only make things worse. Unless something is done to get a handle on the problem, interest payments on our debt could soon engulf our generation. Paying for the fiscal misdeeds of past generations is bad enough, but being forced to use vast sums of tax money just to make interest payments (which doesn’t go to any beneficial government service) is simply unconscionable.
Or maybe Washington is just a step ahead. Perhaps Congress believes the Mayans and they are spending like there’s no tomorrow, because, well, there is no tomorrow. Unlikely, but at least it provide some explanation for Washington’s insatiable spending habits.