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How Much of the Federal Debt Do You Owe?
HOW MUCH OF THE FEDERAL DEBT DO YOU OWE? One realistic and cautious estimate of the growth in federal government debt shows that our government will be unable to pay for anything by 2049. No national defense spending. No education spending. No spending on renewable energy. All agency and redistribution spending will come to an abrupt stop. Even those on the left should be concerned about the financial tsunami that, by 2040, will absorb nearly 40 percent of everything America makes each year.[1]
There are three components to this mess: THE NATIONAL DEBT - $11 Trillion The national debt has ballooned to $11 trillion. Factor in recent federal spending, specifically the American Recovery and Reinvestment Act of 2009, and that $11 trillion figure soars even higher. The chart below tracks federal debt from 1950 through 2008.
(Data source: U.S. Treasury) What is the national debt? The national debt consists of public debt and intragovernmental holdings. Public debt is the amount of money owed by the United States government to the public (state governments, corporations, individuals, and foreign entities). Intragovernmental holdings are debt that is created when the government borrows from various federal agencies such as the Social Security Administration. This creates an IOU (debt) that needs to be repaid to that agency. Our national debt grows annually by the amount of the federal deficit. FEDERAL DEFICIT for 2009 - $1.8 Trillion The federal deficit for 2009 is expected to total over $1.8 trillion (12.9 percent of GDP).[2] The projected deficit for 2009 more than doubles last year’s deficit, and as a percentage of GDP, smashes the previous high of 6.0 percent set in World War II. The average annual deficit over the past 40 years has been 2.3 percent of GDP.[3] What is the federal deficit? Each year the government makes a budget. When government spends less than it raises in revenue for the year (which rarely happens), a surplus exists. When the government spends more money than it has coming in, a deficit exists. Accumulated deficits result in a larger federal debt. WHAT IS THE REAL NATIONAL DEBT? - $56.4 Trillion The $11 trillion figure often referred to as our “national debt” is misleading. The figure disregards government liabilities it is legally required to meet, such as civilian and military retirement benefits. The $11 trillion figure also does not take into account federal entitlements like Social Security and Medicare benefits the government has promised to pay out. Social Security and Medicare are unfunded liabilities (debt). They are obligations to which the government has committed for which there are currently no funds. These unfunded liabilities make up a significant percentage of the “real” national debt which has now reached an astounding $56.4 trillion. As the chart below indicates, Social Security and Medicare constitute approximately $43 trillion of the $56.4 trillion debt. With increasing numbers of baby boomers becoming eligible for Social Security and Medicare and the pool of taxpayers decreasing, these unfunded liabilities will continue to increase and so will the “real” national debt barring any policy changes. David Walker, who served as Comptroller General of the United States and head of the Government Accountability Office from 1998-2008, suggests that our country is legally bankrupt because the “real” national debt figure is so large. [4] That is, our liabilities are larger than our assets. 
(Data source: Peter G. Peterson Foundation) HOW MUCH OF THIS DEBT DO YOU HAVE TO PAY? $184,000 PER PERSON
$483,000 PER HOUSEHOLD You, along with every other U.S. citizen, owe a portion of the total debt. To your personal balance sheet, add $184,000 in debt. Since children and pensioners don’t produce, what about a family’s burden? Your liability, and that of every “average” family, is $483,000. That is real debt that you will have to address. Every time you hear the deficit go up by $1 trillion, you will have to pay an additional $3,300!
Resources:
The Heritage Foundation has created a 13-minute video that uses simply, everyday language to outline the problems with our current Social Security and Medicare programs. You can watch the video online or order a free DVD from their website. Heritage will also send you, free of charge, a packet including materials to help you host a discussion about the issue. http://www.ALegacyofDebt.com
People from all parties and political ideologies understand that there is a problem with our endowment programs. David Walker, former head of the Government Accountability Office and a political independent, illustrates this fact through his video Your Child's Inheritance: Debt. http://politube.org/show/819
The National Center for Policy Analysis, a nonpartisan think tank established in 1983 whose goal is to "develop and promote private alternatives to government regulation and control...," created a detailed report in December 2008 on government debt and entitlements. The statistics and afigures that they provide are startling. http://www.ncpa.org/pdfs/st317.pdf
Watch the national debt grow: http://twitter.com/NationalDebt
Learn more about our federal debt and deficit at: http://www.cbo.gov/
Find out more about the “real” national debt at: http://www.pgpf.org/about/nationaldebt/
Learn more about the future impact of the current "stimulus" package at Stop Spending Our Future.
Possible Solutions:
The Cato Institute provides several suggestions for reforming our Medicare system, including vouchers, "means-tested" premiums, and private investment accounts. http://www.cato.org/pubs/handbook/hb111/hb111-12.pdf
The National Review Online addresses concerns about privatizing Social Security. It points out that our current system is much riskier than private investment accounts would be. http://www.nationalreview.com/nrof_comment/comment-biggs021502.shtml
The Cato Project on Social Security Choice explains its proposal for reforming Social Security. Individuals could opt to continue utilizing the current system or could direct funds to private investment accounts. http://www.socialsecurity.org/pubs/ssps/ssp-32es.html
[1] Peter Peterson Foundation. “The State of the Union’s Finances.” July 2008.
[2] Taylor, Andrew. US Red Ink Rising Even Higher, to $1.8T. Yahoo Finance
http://finance.yahoo.com/news/White-House-Budget-deficit-to-APF-15199183.html?.v=8
[3] Peter Peterson Foundation. “The State of the Union’s Finances.” July 2008.
[4] David Walker, United States Government Accountability Office. “Making Tough Budget Choices to Create a Better Future.” March 2008.
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» Jon Caldara
- President of the Independence Institute
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» Jessica Peck Corry
- Director of the Campus Accountability Project and Property Rights Project
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» Marya DeGrow
- Research Associate, Education Policy Center
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