Wednesday, September 28, 2016

The Real Financial Elephant In The Room

The United States National Debt is around $19 Trillion.  To spell that out, that $19,000,000,000,000.  That we owe to someone else.  Think of it as the credit card balance that you know is hanging out there but do not really want to think about because you are not really sure what it means.

It used to be less of course - $9,000,000,000,000 eight years ago.  We have managed to double it in 8 years.

But there is better news.  Unfunded liabilities - those things that we have promised to pay for are not immediately in our sights to pay for, things like Social Security and Medicate and Pensions - are at estimated at $100 Trillion as of July of this year.  Again, $100,000,000,000,000 of money we owe.  That we have pretty much no idea how we are going to fund it.

Think it does not matter?  Keep in mind that this is not some kind of "Bank of Mom and Dad" loan where there is no interest. There is interest - after all, we borrowed it.  The interest rate pretty low right now - around 0.5%.  What does that mean for what we we currently owe - about another $50 Billion added to the bill.

Think this does not matter?  It matters on two levels - on the current Federal Debt, the more interest we have to pay the more money we either have to get from somewhere else, charge in taxes, or cut in spending to pay for it.  And the Unfunded Liabilities?  If you are a potential recipient of Medicare, Social Security, or a Pension, you are impacted by this.

And yet no-one in the political campaign is seriously - seriously - talking about this.

This impacts us.  This impacts our children. This impacts the very ability of our country to survive (Ever worked for a business in over its head or had a family budget with the same problem?  It is not pleasant).

But no-one talks about it.  We try to ignore it the way a spendthrift ignores the credit card bill that shows up every month with a higher and higher balance:  we look at it, toss it in the recycling pile, and think "I am sure that when the time comes, this will get resolved."

When I first started following unfunded liabilities almost eight years ago, it was estimated at $52 Trillion.  It has approximately doubled (as the national debt has) in 8 years.  Do a little math with me:

2024:  $38 Trillion National Debt, $200 Trillion Unfunded Liabilities
2032:  $76 Trillion National Debt, $400 Trillion Unfunded Liabilities
2040:  $152 Trillion National Debt, $800 Trillion Unfunded Liabilities
2048:  $304 Trillion National Debt, $1.6 Quadrillion Unfunded Liabilities

Yes I know this is just simply doubling.  Compound interest makes the problem far more vexing.

Yes, it matters.

Sure, argue rights and foreign policy.  Accuse each other of bad judgment and poor personal choices.  Mercilessly mock the other side for their close mindedness and ignorant behavior.

But when, oh when will we demand of them they focus on the issues that actually impact us instead of just stroking our egos about how clever and aware we are?

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