Lie #3: U.S. Debt Is $15 Trillion
This may be the most brazen and transparent lie of all, the one about the U.S. national debt, now over $15 trillion dollars. It is a number that hides the severity of our situation.
Washington acts as though that is the real debt of the nation. Politicians posture for weeks at a time about it, devoting long debates to raising the ceiling on this national debt. And yet, the real federal debt is much, much larger and like an iceberg — most of it is hidden out of sight below the water line.
Like the Titanic, Republican and Democrats have the country headed for a collision with reality.
Each year, the federal government makes promises and adds trillions in new financial obligations that do not show up in the visible, official national debt. The persistent growth of these hidden debts each year far outpaces the increases in the visible debt. In 2010, for example, the visible federal debt grew by an astonishing $1.5 trillion. But the hidden debt grew — out of sight and without debate — by more than $5 trillion!
When a private business takes on an obligation to pay something, it is required to report it as a liability. It shows up on the books. Not so for the state.
Politicians make promises without adequate revenues to pay for them. It is easy to understand why this should be so. Giving things to constituents feels good. Making them pay for those things causes them pain. Like most living creatures, politicians like to feel good and avoid pain. So when they add to the obligations of the state, when politicians make commitments for the future or promise entitlements like Social Security and Medicare to win re-election, the means to pay are often inadequate. But there is no such thing as a free lunch, which is to say, that the cost will have to be borne eventually by somebody. But for the time being the preferred political expediency is keeping the costs, the liabilities, off the books.
Unfunded liabilities are the difference between a program’s projected costs and its projected revenues, both valued in today’s dollars.
Medicare and Social Security both have promised benefits that outrace revenue streams. They are major components of the unfunded liabilities, the hidden debt of the nation. But there are other federal retirement programs with not merely inadequate funding like Medicare and Social Security, but with no revenue streams of their own at all. Among them are retirement programs for military and federal workers.
In September 2011, USA Today analyzed dozens of overlapping programs for retired federal workers. It reported that despite the existing debt crisis, Congress continues to add to the promised benefits, so that retirement programs now have a $5.7 trillion unfunded liability.
The total unfunded liabilities of the U.S. government have been calculated with a number of present value and discount models. Results of the shortfall from these methods range from about $70 trillion to $120 trillion dollars. For a family of four this represents a liability between $900,000 and $1.5 million. (You can follow the debt as it adds up at www.USdebt.org.)
What does the state say about its unfunded liabilities?
Here’s a response from the Congressional Budget Office, which answers, “… no government obligation can be truly considered ‘unfunded’ because of the U.S. government’s sovereign power to tax — which is the ultimate resource to meet its obligations.”
That is utter hooey. It conjures up an absurdity in which the government could meet its obligation by sending your Social Security check, even as it raises a tax to take 100 percent of everything you get from Social Security. The reason that is an absurdity is that it is a two-step process to do what the government will do in just one step. It will unilaterally reduce its “obligation,” leaving millions of people betrayed.
Because it is the government. And it lies about everything.