This is something that may be impossible to do. The numbers are astounding. According to the US Treasury, we now owe more than 12 Trillion, 322 Billion, 720 Thousand dollars. This represents the principal amount of marketable and non-marketable securities outstanding. That amounts to about $40k per citizen.
Gee, that doesn’t sound great, but $40K is at least a number that I can get my brain around. That’s a nice car, it’s not a lifetime of work or savings. After all, there are some big businesses out there, and some rich people that can certainly pay more than $40K.
But wait, that’s not the whole story.
According to this CNN article, in 2009: “… roughly 47% of households, or 71 million, will not owe any federal income tax, according to estimates by the nonpartisan Tax Policy Center.”
How can this be?
factcheck.org in 2008: “According to the Urban-Brookings Tax Policy Center, it is true that 38 percent of “tax units” — which can be singles, couples, or families — are projected to have zero or negative income tax liability in 2009.”
Apparently the projections were off. So, that roughly doubles that $40K figure for the lucky 53% that does pay taxes.
Well, that’s a lot of dough, but jeez, folks like Bill Gates and other rich people can afford to pay more, right? They do, in fact. Here’s a Fox Business News Article commenting on IRS data on just that topic: ”
“According to newly released Internal Revenue Service data, the top 1% of American tax filers earned 22.8% of the nation’s income in 2007 and paid 40.4% of the nation’s federal income tax.
This would mean the top 1% of tax filers pays more federal income tax than the bottom 95% of tax filers combined, according to a Tax Foundation analysis.”
Note, this is from 2007. It’s doubtful that things have changed much.
Some folks make the point that, hey, the 47% we’re talking about actually DO pay taxes, just not income tax. The same factcheck.org article helpfully points out:
“However, being exempt from income tax does not mean you’re exempt from federal taxes. Everyone who works is liable for payroll taxes, contributions to Medicare and Social Security that come out of every paycheck.”
Wow! That makes me feel a whole lot better; except for the fact that we just mixed apples and oranges. See, that big $12 Trillion, 322 Billion, 720 Thousand dollar number referred to at the top of this post doesn’t take Social Security, Medicare and Prescription Drug funding into account.
According to the Federal Reserve:
Social Security has an unfunded liability of more than $14.1 Trillion.
Medicare has an unfunded liability of more than $74.3 Trillion.
The Prescription Drug Program has an unfunded liability of more than $18.5 Trillion.
This adds up to a total unfunded liability of $107.1 Trillion … and counting.
What the heck is an “unfunded liability” anyway? This is the amount by which the liabilities of a program exceed program assets, at a given date. So, basically, the number of people projected to draw funds from Social Security will require $14.1 Trillion more than is expected to be in the fund. The same holds true for the remainder of the $107.1 Trillion.
So, let’s assume that we all get a share of this debt (even those that aren’t paying income taxes). That’d mean that every US citizen is responsible for about $347,000. I’m not actually sure if this includes the other debt mentioned above – this is fantasy land to me.
But wait, we’re a rich country.
Yup, that’s true. Again, according to the Federal Reserve, our total national assets amount to about $74.6 Trillion. The good news is we could physically pay for the first debt – the budgetary debt. If we all got together and paid that off, we’d still have more than $62 Trillion left over. But, even if we took all that money and applied it to those unfunded liabilities, we’d come up about $45 Trillion short. But heck, who’s counting?
This seems riddiculous. It doesn’t even seem like it could possibly be real. But yet, our politicians persist in building up more debt.
Oh, but wait, good news today.
According to this ABC news article headline:
I sure am glad our President is finally taking this debt thing seriously! He’s planning to reduce that non-security discretionary spending (I confess, I don’t know exactly what this is, but heck, I’ll take it). This is going to save a whopping $250 Billion … over the next 10 years. That’s $25 Billion a year.
Somehow, in the context of Trillion dollar budgets, that doesn’t seem like much.
Here are some thoughts from George Washington on running up debt:
“Experience has demonstrated the impracticality long to maintain a paper credit without funds for its redemption.”
“To contract new debts is not the way to pay old ones.”
“As a very important source of strength and security, cherish public credit. One method of preserving it is to use it as sparingly as possible, avoiding occasions of expense by cultivating peace, but remembering also that timely disbursements to prepare for danger frequently prevent much greater disbursements to repel it, avoiding likewise the accumulation of debt, not only by shunning occasions of expense, but by vigorous exertions in time of peace to discharge the debts which unavoidable wars may have occasioned, not ungenerously throwing upon posterity the burden which we ourselves ought to bear.”
It seems obvious that Washington could see that in times of war, we might get ourselves into a financial pickle. I doubt he’d think that spending Trillions we don’t have on subsidized health care and such would be a good idea.