The United States is on a path to financial ruin, and everyone can see what is happening, but nobody can seem to come up with a way to stop it. According to the U.S. Treasury, the federal government is currently 22 trillion dollars in debt, and that represents the single largest debt in the history of the planet. Over the past decade, we have been adding to that debt at a rate of about 1.1 trillion dollars a year, and we will add more than a trillion dollars to that total once again this year. But when you add in our unfunded liabilities, our long-term financial outlook as a nation looks downright apocalyptic. According to Boston University economics professor Laurence Kotlikoff, the U.S. is currently facing 200 trillion dollars in unfunded liabilities, and when you add that number to our 22 trillion dollar debt, you get a grand total of 222 trillion dollars.
Of course we are never going to pay back all of this debt.
The truth is that we are just going to keep accumulating more debt until the system completely and utterly collapses.
And even though the federal government is the biggest offender, there are also others to blame for the mess that we find ourselves in. State and local governments are more than 3 trillion dollars in debt, corporate debt has more than doubled since the last financial crisis, and U.S. consumers are more than 13 trillion dollars in debt.
When you add it all together, the total amount of debt in our society is well above 300 percent of GDP, and it keeps rising with each passing year.
But for the moment, let’s just focus on the giant mountain of debt that the federal government has piled up. The U.S. budget deficit for last month was 234 billion dollars, and that was an all-time record for a single month. Our exploding debt is an existential threat to our nation, and we are literally destroying the bright future that our children and our grandchildren were supposed to have.
And it isn’t just a 22 trillion dollar debt that we are leaving them with. We have also made tens of trillions of dollars worth of future promises that we expect future generations to keep. These are called “unfunded liabilities” because we do not currently have the money to fulfill those obligations.
According to official government projections, the Social Security Administration is facing a 13 trillion dollar unfunded liability over the next 75 years, and Medicare is facing a 37 trillion dollar unfunded liability over the same time frame.
Adding those two numbers together, we get a grand total of 50 trillion dollars.
Where in the world would we ever be able to get so much money when we are already drowning in debt?
Unfortunately, as is so often the case with government projections, those unfunded liability numbers are actually wildly optimistic.
Boston University economics professor Laurence Kotlikoff has been studying our unfunded liability crisis for many years, and according to him the real number is 200 trillion dollars…
Consumers will largely bear the brunt of the country’s financial ruin, according to Kotlikoff, which is why it is crucial to give them the power to make better financial decisions.
While the United States’ official debt is $20 trillion, the fiscal gap is really 10 times larger — $200 trillion. That comes from adding in off-the-book liabilities, including debt that’s in the Federal Reserve’s hands, Kotlikoff said.
If Kotlikoff is correct, that means that the true size of the financial obligation that we are imposing upon future generations is 222 trillion dollars, and that number just keeps rising month after month.
Many pundits speak of a day when America will be bankrupt in the future, but according to Kotlikoff we are bankrupt “right now”…
But Kotlikoff’s dire prognosis for the United States is enough to wake anyone out of even the deepest summer slumber.
“The evidence is in front of our eyes that we’re bankrupt,” Kotlikoff said. “It’s not bankrupt in the future. It’s bankrupt right now.”
Unfortunately, there doesn’t appear to be an easy way out. Any politician that would be foolish enough to even threaten to reduce Social Security and Medicare benefits would be immediately voted out of office. America’s population is rapidly aging, and about half of America’s seniors don’t have anything saved for retirement…
The bad news is that almost half of Americans approaching retirement have nothing saved in a 401(k) or other individual account. The good news is that the new estimate, from the U.S. Government Accountability Office, is slightly better than a few years earlier.
Of those 55 and older, 48 percent had nothing put away in a 401(k)-style defined contribution plan or an individual retirement account, according to a GAO estimate for 2016 that was released Tuesday.
America’s seniors are counting on us to keep the promises that we have made to them.
Sadly, it doesn’t appear that we are going to be able to do that for too much longer.
In the end, we are going to have to make some very tough choices. One Democrat actually started a petition to sell the state of Montana to Canada for a trillion dollars, and so far it has over 18,000 signatures. Of course we aren’t ever going to sell off pieces of our country, but we are going to have to find some way to come up with an enormous mountain of money.
When I ran for Congress last year, I made doing something about the national debt one of my top issues. Unfortunately, concern about the national debt is not a priority for either political party right now, and that is a huge mistake.
You can spend more money than you are bringing in for quite a while, but eventually a day of reckoning arrives. Anyone that has ever gone into too much credit card debt knows exactly what I am talking about. We have been on the biggest debt binge in the history of the world, and it has allowed us to enjoy a standard of living that is far beyond what we actually deserve, but the price that we will pay for such utter foolishness will be extremely painful indeed.