Actual US Deficit $8 Trillion, Greater Than $6.6 Trillion After Tax Income
By Charles Biderman
It was an Aha moment for me when I read Chris Cox and Bill Archer’s op-ed in today’s Wall Street Journal. By the way this article is must reading and linked to on our blog site.
The specific Aha was that these two former Clinton Economists had uncovered, buried in the annual Medicare Trustees Report, that the growth in today’s dollars of future Medicare and Social Security obligations is a whopping $7 trillion annually. What that means is if the US were a public company it would have to report a loss of $7 trillion this year, and that would boost the current budget deficit to $8 trillion. What is more incredible is that total after tax income for all Americans is $6.6 trillion, less than what the government is spending in the real world!
This is crazy!
In on a January 25 video, I estimated $50 trillion as the present value of total federal government entitlements. I was wrong. Cox and Archer report the current liability of the federal government is an incredible $87 trillion for Social Security, Medicare and federal employees’ future benefits. That is a third bigger than the entire $63 trillion net worth of the entire US. We owe more than we have and we spend and promise to spend way more than we make.
The US is at a fiscal cliff where everyone expects a deal that will include a small amount of future entitlement cuts in exchange for a few hundred billion of higher taxes. This is a colossal joke. Our government is promising more in future entitlements than total income. And this administration says entitlement cuts are off the table. After all Paul Krugman tells them that deficits do not matter.
Let us go back to the public company analogy. Enron, Worldcom Bernie Madoff as well as other frauds hid the truth from the world. When the truth came out the bad guys went to jail. Well what is the difference between that kind of fraud and specific US government officials deciding that we do not need to know that we are committing $7 trillion this year as the present value of future entitlements. Why shouldn’t some government official go to jail for hiding this info?
Am I overreacting? Maybe. But I really do think it is criminal to hide the truth about something this important, particularly when the truth reveals that we are in essence already broke. And instead of talking about higher taxes, the conversation should be about how best to restructure the de facto already bankrupt US.
For at least 10 years now I have been asking why is the US government ignoring real time data and instead using estimates based upon historic data updated by surveys as the basis for key economic reports from the BLS and BEA, for instance, that are closely watched by the markets.
Now I think I know why. The US government is in the mushroom growing business. Keep us citizens in the dark as much as possible and throw bull shit all over us.
I have a very simple solution. If I were in charge, I would extract from withheld income and employment tax payments current real time income. In addition I would also report the number of people working, in which sectors and in what zip codes. Then I would aggregate all spending info from Master Card, Visa etc. and then update in real time the US income and balance sheet, as well as future liabilities.
It is interesting. The government requires full disclosure by public companies. But why shouldn’t government accounting be held to the same standards? I think it should be a criminal offense, if it already isn’t, for government officials to hide key data.
TrimTabs
By Charles Biderman
It was an Aha moment for me when I read Chris Cox and Bill Archer’s op-ed in today’s Wall Street Journal. By the way this article is must reading and linked to on our blog site.
The specific Aha was that these two former Clinton Economists had uncovered, buried in the annual Medicare Trustees Report, that the growth in today’s dollars of future Medicare and Social Security obligations is a whopping $7 trillion annually. What that means is if the US were a public company it would have to report a loss of $7 trillion this year, and that would boost the current budget deficit to $8 trillion. What is more incredible is that total after tax income for all Americans is $6.6 trillion, less than what the government is spending in the real world!
This is crazy!
In on a January 25 video, I estimated $50 trillion as the present value of total federal government entitlements. I was wrong. Cox and Archer report the current liability of the federal government is an incredible $87 trillion for Social Security, Medicare and federal employees’ future benefits. That is a third bigger than the entire $63 trillion net worth of the entire US. We owe more than we have and we spend and promise to spend way more than we make.
The US is at a fiscal cliff where everyone expects a deal that will include a small amount of future entitlement cuts in exchange for a few hundred billion of higher taxes. This is a colossal joke. Our government is promising more in future entitlements than total income. And this administration says entitlement cuts are off the table. After all Paul Krugman tells them that deficits do not matter.
Let us go back to the public company analogy. Enron, Worldcom Bernie Madoff as well as other frauds hid the truth from the world. When the truth came out the bad guys went to jail. Well what is the difference between that kind of fraud and specific US government officials deciding that we do not need to know that we are committing $7 trillion this year as the present value of future entitlements. Why shouldn’t some government official go to jail for hiding this info?
Am I overreacting? Maybe. But I really do think it is criminal to hide the truth about something this important, particularly when the truth reveals that we are in essence already broke. And instead of talking about higher taxes, the conversation should be about how best to restructure the de facto already bankrupt US.
For at least 10 years now I have been asking why is the US government ignoring real time data and instead using estimates based upon historic data updated by surveys as the basis for key economic reports from the BLS and BEA, for instance, that are closely watched by the markets.
Now I think I know why. The US government is in the mushroom growing business. Keep us citizens in the dark as much as possible and throw bull shit all over us.
I have a very simple solution. If I were in charge, I would extract from withheld income and employment tax payments current real time income. In addition I would also report the number of people working, in which sectors and in what zip codes. Then I would aggregate all spending info from Master Card, Visa etc. and then update in real time the US income and balance sheet, as well as future liabilities.
It is interesting. The government requires full disclosure by public companies. But why shouldn’t government accounting be held to the same standards? I think it should be a criminal offense, if it already isn’t, for government officials to hide key data.
TrimTabs