Skip to comments.Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt
Posted on 11/27/2012 7:08:58 AM PST by SeekAndFind
A decade and a half ago, both of us served on President Clinton's Bipartisan Commission on Entitlement and Tax Reform, the forerunner to President Obama's recent National Commission on Fiscal Responsibility and Reform. In 1994 we predicted that, unless something was done to control runaway entitlement spending, Medicare and Social Security would eventually go bankrupt or confront severe benefit cuts.
Eighteen years later, nothing has been done. Why? The usual reason is that entitlement reform is the third rail of American politics. That explanation presupposes voter demand for entitlements at any cost, even if it means bankrupting the nation.
A better explanation is that 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?
As Washington wrestles with the roughly $600 billion "fiscal cliff" and the 2013 budget, the far greater fiscal challenge of the U.S. government's unfunded pension and health-care liabilities remains offstage. The truly important figures would appear on the federal balance sheetif the government prepared an accurate one.
But it hasn't. 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.
(Excerpt) Read more at online.wsj.com ...
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 governmentincluding Social Security, Medicare, and federal employees' future retirement benefitsalready 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.
TO MAKE A LONG STORY SHORT --- WE'RE ACTUALLY BANKRUPT. WE JUST WON'T FACE THE FACT.
Bring back US jobs to America.
RE: Bring back US jobs to America.
Easy to make slogans. HOW do you do it?
It is truly a shame that the Republicans had all three branches of government and did not address these problems. I know that President Bush did address Social Secuirty reform but I don’t believe that was during the time we had all three part of government. Plus Bush backed off because a few democrats said “boo”.
Just putting it out there.
I have my ideas, but I prefer not to get bogged down in them until we get a consensus first.
Federal Financial Stewardship File.
The media keeps saying fiscal cliff. We are down the river without a paddle thanks to the media.
And we need lower gasoline prices. But jobs and gasoline have no bearing on the fact that the government spends too much money.
We might as well be complaining about sunspots....
Americans spend too much on imports.
It’s currently a wash.
Americans spending too much money on imports has nothing to do with the government spending too much money, period. And until we can start talking about government spending without throwing-around red herrings, nothing will be accomplished.
GWB was right on SSI and Fannie and Freddie and 2 exit ramps were passed, read my tagline...
I thought that was your point. Let me reply please:
We need to stop buying so many imports.
Billions and billions worth. Meanwhile the government needs to stop spending billions and billions on everything.
But the two are completely related.
Our side is trying to be perceived as responsible. Yet we do nothing as US manufacturing heads ever, and ever more overseas.
What does this do?
When a budget is being discussed the GOP says we are spending too much, what is the public supposed to think?
The public (at least some of the public) is not perceptive like you. The public sees US corporations constantly shipping more and more jobs overseas - and thinks two things:
Now there is some truth in that.
We must start to take the position advocating for American jobs.
Don’t you understand? Big numbers just confuse the Stoooopid American voter. Recently, custody of an Argentinian warship was transferred to a debtor when it came into a foreign port. That happening to us would suit the Dems just fine as long as “entitlement” payments went out as usual.
Not by raising corp taxes more and more.
I expect many companies to issue their dividends early this year—in Dec, so they will be taxes at the curent rate instead of the rate next year. I would if I were in charge.
That's why tossing around bumper-sticker slogans is pointless. Unless it makes you feel like you've accomplished something.
The two are completely related. And the GOP has taken the wrong side. For too long.
This last election, this has hit equilibrium in terms of voters. May have moved a bit in the Democrat position, or (as I suspect) Mormons are just too ... “whatever” to win a national election.
Whichever is the reason, the fix is obvious:
Bring back US jobs. Now.
There is no more time to wait.
Related in the same way that, in a discussion of why a particular baseball team needs a solid starting rotation in order to succeed, you insist that it needs more hitters.
Not at all.
American hitters would be far preferable to always hiring foreigners though.
This is becoming a national issue. We need patriotism to win out over what is happening now:
Selling out America.
I do not mean to focus only on the corporation. Government also wastes billions and billions and billions every day.
But Corporation are ripping off America equally, and it is harmful to our country.
It must stop.
The “key point” is that there is no point in We the People are expecting DC to do anything about this mess...
The bigger the mess...the more power DC accrues....
But....but....but....I distinctly heard Obama say we couldn't cut our way to prosperity and it had such a nice slogany ring to it...Looks like all those debt consolidation businesses that also require reduced household spending as part of the cure are full of it..
Government costs too much. People need 2 inflated incomes to support a family. Corporations have significant overhead burdens to comply with all of the laws and regs (HR policies, accounting standards, tax laws, OSHA, EPA, tariffs, etc.).
Slash government spending and pass the savings to people and business. People won't need such inflated wages to make ends meet. Companies can then afford American workers and we'll start building things here again.
RATS would have filibustered any real eform.
Not a complicated concept to understand. That's why the caterwauling about jobs here (on this thread) is just that, caterwauling.
Umm... OK. But that has very little to do with the federal government being bankrupt.
Are you sure you posted to the right thread? Did you even read the article?
3 ways; Tariffs, Right_To_Work Laws and Seal the Borders.
I refer you to my comment #26.
Perhaps a key observation to be made about jobs leaving the country is that it is a side effect of increasingly efficient multinational corporation trade supporting infrastructure and particularly international trade and the information networks. This in comparison with income disparity between the USA and third world / “developing” countries leads to jobs migrating as a matter of economic law, not necessarily politics or legislative policy.
So what can we do about economics and increasingly efficient international trade infrastructure? Perhaps not a lot besides tariffs. But politicians seem adverse to tariffs, perhaps due to the disproportionate influence of multinational lobbying (aka foreign campaign contributions). Nothing much can be done about this problem given the current status — nationwide mass instant gratification at any cost — without violating the First Amendment for corporate persons.
If we slap tariffs on countries indiscriminately, prices of stuff based on materials not readily available in the USA might rise inordinately— think oil, titanium, rare earth metals, etc. — that currently are a part of products used in everyday life in the USA. This would hypothetically make prices of such things as gasoline used in cars, cell phones, and jet airplanes rise to near astronomical levels in US dollars, unless we have or can produce stuff that other countries want, need, and are able and willing to buy.
More and better paying jobs does not seem to attack, and solve directly, the core problem of entitlements exceeding revenues— from recent (eg dot com boom era) past experience, more tax revenues usually just leads to increasing entitlements due to the collective inertia of our current domestic political processes’ social inertia.
The phenomenon of jobs leaving rhe US seem as if they might only be solved on an even playing field by normalizing benfits and industrial regulations across international borders. This implies that the incomes and thus living standards of workers in developing countries rise while the living standards of workers in developed countries such as the USA be lowered until the living standards of all countries become more or less equal.
In modern (War between the States and beyond) US history, I don’t believe a decline in living standards has ever avoided being accompanied by an accumulation in federal government of power relative to individual citizens, one way or another.
So a decision of what to do about SS and other big ticket federal entitlements may ultimately be up to faceless federal bureaucrats even more than the current political system we have in place with all its various flaws. What would they do when faced by a Hobbsean choice of upsetting large numbers of retired/disabled former workers or employed workers? Sooner or later economics will make the question of whether to raise taxes moot. That leaves printing money, aka QE3, or Obamacare triage, aka death squads. Here I’m presuming we don’t go the route of pre-WWII Germany and Japan and start invading other countries willy-nilly simply because we think we are better than they are or because we deserve their stuff. Something that would in theory tend to avoid war is yielding sovereignty via merging into a larger economic unit such as NAFTA or WHFTA. At that point, the USA and its unique form of government might officially become extinct. A few folks (Freepers for example if they are still around then) might complain, but the liberal alliance of very rich and less well off would probably welcome such a move if it were cloaked with the message of being economically justified to help prevent or forestall an economic Armegeddon.
This all in turn supposes that a WW III does not occur first, which of course seems to be an ever present possibility given that other countries don’t seem to have even the admittedly meager political means to handle economic challenges that we in the US currently “enjoy” ...
One of the primary reasons USA is where it is today...
Somehow USA sending huge swaths of its wealth to other nations, many of them our enemies, has no effect on our tax revenue. How could this be? Almost nothing is made here. A proper middle class earns from manufacturing. Nearly every middle class job in manufacturing has moved to China, Korea.
Now we are actually in the position of USG borrowing (more) money, some from China, in order to protect USA from China. All the while USA is encouraged by many, to continue to spend the majority of their income on Chinese products. Those purchases _fund_ Chinese military growth and reduce our tax base. Repeat until it all comes crashing down into a huge pile of stupid.
Yup, we have some real problems and some posters herein are part of them....
You are correct, some posters have a problem . . . failure to understand the above is a big part.
If we didn’t run a trade deficit then China wouldn’t have all those extra dollars that they lend to U.S. to cover the budget deficit.
We won’t bring jobs back here until we can make our taxes and regulations competitive and deny power to labor unions.
Let's say that China owns one-third to one-half of the debt held by foreigners. You still haven't addressed the larger problem.
Explain how a 10% tariff would make imports "rise to near astronomical levels in US dollars". This is more gloBULList lies. You guys are so FOS.
Man, you get testy when people on a conservative website question whether raising taxes is such a good idea.
Explain how a 10% tariff will make prices SKYROCKET! it is you statist gloBULList side that use lies and hyperbole.
Right after you explain how lowering the unemployment rate will eliminate our budget deficit. Stuff it.
If I only have $100 in my checking account and I write a check to the grocery store for $150, the check comes back and the store didn’t get the money it thought it was getting. And the store will no longer take my checks.
I know this is not the way it’s done anymore since now there are bar codes on the checks and you can’t “float” them anymore. But that’s still basically what the government is doing. So, can someone explain, in VERY simple terms, why anyone keeps accepting “hot” checks from America?
A large part is that the investment is still perceived to be “safe,” whether you are a foreigner, or not. Another part might be the “it won’t happen to me, it will happen to them”-syndrome.
Barry says “if I have checks, I have money”.
Lets pause for a second over “imports”.
When was the last time that you could buy a TV made in America? When was the last time that you could find a pair of tennis shoes made in the US? When was the last time that you could find a microwave made in the US?
Our entire economy is now based on imports. We can’t manufacture much of anything...even cellphones.
It’d be nice to reopen the door...but frankly, when you figure up the cost of manufacturing a TV in the US or Taiwan....and there’s a $700 difference between the two same versions, there’s not much to talk about. We priced ourselves out of the mess.
Yeah, our trade dealing is part of the problem but this is a untouchable item. Just like pumping oil out of Texas and thinking it’ll be used in the US, when there’s tankers sitting in the Gulf and ready to transport Texas oil over to Italy.
Excellent! The first step is to double the cost of oil.
Don’t be obtuse. You don’t pay the tariff on oil unless you buy oil.
Making America more lucrative and inviting to foreign investment, heck for our own companies too, is the only way to grow the economy and jobs.
Government jobs ain’t going to do it
SS and Medicare are not contractual debts.
They are political promises.
Made by a couple of generations of politicians who ignored the Enumerated Powers, stole the money, and spent it on their own political self-aggrandizement. Every red cent.
Unemployed people draw unemployment which adds to the debt/deficit, should I start talking to you like first grader. Do you really know basic math and economics?
Don’t forget, we can double the cost of imported oil and the price of domestic oil will remain unchanged.