As the recent election season heated up, the statistics tracked at USDebtClock.org crossed a shocking threshold. The combined unfunded liabilities for Social Security, Medicare and Medicaid alone now total over a million dollars for each and every tax payer in America. That doesn’t include the more than $124,000 share of the official federal debt per taxpayer, the huge undocumented liabilities that the Federal Reserve has committed taxpayer guarantees for in the last three years, the large state and local government debt burdens, the huge unfunded liabilities in the public employee pension systems or all the other financial liabilities our governments have committed taxpayers to cover.
Combined unfunded Social Security, Medicare and Medicaid liabilities and the official federal debt stand at almost 125 trillion dollars, almost twice the value of all the privately owned assets in the country, and more than ten times US GDP. At some point, even the most optimistic liberal has to wonder how sustainable the continued borrowing and unfunded political promises can really be. Everyone paying attention at all is starting to realize it has to end.
Leading up to the recent election, the anger expressed by those concerned about our economy was a sign of healthy recognition by ordinary people that the commitments made by our federal government are in reality just a giant Ponzi scheme. We’ve been had. And now – we’re broke.
Politicians recently elected face an unprecedented level of citizen expectations for economic responsibility and accountability. I don’t envy any of them. The economic challenges they face are enormous and the only responsible actions possible will be hugely unpopular.
I am encouraged by the few newly elected Senators and Representatives vowing to vote against authorizing any increase to the federal debt limit. While a successful vote to stop the insane levels of borrowing might precipitate another financial crisis, the reality is that it is all the generous votes for nice ideas without realistic funding mechanisms that Congress has taken in the last half century that has actually caused the crisis. Eventually some grownups have to step in and stop the madness. Hopefully that will start to happen in the 112th Congress.
As Margaret Thatcher suggested, “the problem with socialism is that eventually you run out of other peoples money to spend”. That’s the exact same problem Mr. Ponzi ultimately ran into. Most of America is realizing we’re there.