Actually, it is 6.25 trillion over 10 years.
“Actually, it is 6.25 trillion over 10 years.”
Assume no inflation in the general economy or healthcare (clearly wildly optimistic assumptions). A commitment to spend an added $625 billion a year over the next 100 years is the functional equivalent of the government taking on a $19.7 trillion mortgage with a term of 100 years. Unfortunately, by the end of this 10 year period, this particular lender already will be $19T in debt due to other obligations incurred by this president.
An additional consideration is $104T in unfunded liabilities related to other commitments made by this borrower.
The aggregate net worth of this borrower—assuming it could seize and sell every asset owned by its citizens—is about $60T.
In short, the liabilities of this borrower exceed the most generous conceivable estimate of its assets by about two to one even BEFORE one considers adding this $19.7T new liability.
The annual net income of this borrower over this 10 year period will be about $490 billion [http://www.whitehouse.gov/omb/budget/fy2010/assets/summary.pdf]
The foregoing should make clear this borrower is in no position to bankroll its promises. Thus, it will either default on some obligations overtly (by not repaying borrowed amounts in full) or covertly (using inflation to monetize its debt, i.e., repaying borrowers in currency whose value has depreciated considerably). In either case, the borrowers get hosed.
Would any sane banker lend $19.7T to such a reckless borrower? This is the uncomfortable question the Chinese
have begun to ponder seriously.