If your favorite color is red, then you’re going to love the latest findings from the National Bureau of Economic Research.
According to University of California, San Diego, economist James Hamilton the actual national debt is more than five times higher than official Treasury figures indicate, $90 trillion, not $17 trillion. The UK’s Daily Mail reports that:
On the last day of 2012, the national debt clock in New York City showed $16.38 trillion in debt, coming out to more than $138,000 for each U.S. family. Another $300 billion has been added since then, not including the extra $70 TRILLION Hamilton identified. …
But that [official Treasury] number doesn't include several 'off-balance sheet' obligations including $54.1trillion in missing funding for Medicare and Social Security, along with support for federal housing, loan guarantees, savings deposit insurance and the cost of actions taken by the Federal Reserve.
'The biggest items in this category come from Social Security and Medicare which, if current policy is maintained, will require enormous sacrifices from future taxpayers,' Hamilton wrote.
Future commitments for Social Security – whose misnamed 'trust fund' is actually empty – will cost the government $26.5trillion in today's dollars when beneficiaries start cashing in their benefits. Future Medicare commitments account for another $27.6trillion.
'These numbers are so huge it is hard even to discuss them in a coherent way,' argues Hamilton.
'[A]lthough one can quarrel with the specific numbers, there is an undeniable important reality that they reflect — the U.S. population is aging, and an aging population means fewer people paying in and more people expecting benefits. This reality is unambiguously going to be a key constraint on the sustainability of fiscal policy for the United States.' …
'If we don't do something to get a handle on these unfunded liabilities, the result will be complete economic decay and catastrophe,' Club for Growth Spokesman Barney Keller told MailOnline.
This is what happens when the federal government enacts programs initially intended as safety nets for the few: over the years they become entitlement programs for everybody. Our grandchildren will be burdened with our failure to fix these entitlement programs today. We can never raise taxes enough to cover all this debt—especially when government refuses to stop growing entitlement programs.
A few ways to change course include retirement and health savings accounts for younger workers, and allowing tax credits in exchange for current beneficiaries who choose to opt out.