National Debt: Just the facts

Is the Swamp the only place that can never do without a more and more $ every year? Nearly $23 trillion in debt and no thought of stopping???? SickofDC!

Half the battle is in knowing the facts:

Quantifying the National Debt

* As of November 1, 2019, the official debt of the United States government is $23.0 trillion ($22,953,224,244,019). This amounts to:

  • $69,572 for every person living in the U.S.
  • $179,904 for every household in the U.S.
  • 107% of the U.S. economy.
  • 6.3 times annual federal revenues.
  • 45% more than the combined consumer debt of every household in the U.S.

* At the close of 2018, the size of the national debt relative to the U.S. economy was 3.6 times higher than its average over U.S. history.

Liabilities and Obligations

* Federal law requires publicly traded corporations to account for their “explicit” and “implicit” liabilities and obligations. These include employee pensions and other financial burdens that companies have accrued but not paid for yet. This type of bookkeeping is called “accrual accounting.”

* At the close of its 2018 fiscal year, the federal government had accrued roughly:

  • $9.5 trillion ($9,545,000,000,000) in liabilities that are not accounted for in the publicly held national debt, such as federal employee retirement benefits, accounts payable, and environmental/disposal liabilities.
  • $32.4 trillion ($32.408,000,000,000) in unfunded obligations for current Social Security participants.
  • $38.3 trillion ($38,300,000,000,000) in unfunded obligations for current Medicare participants.

* The figures above are determined with federal data in a manner that approximates how publicly traded corporations are required by law to report their liabilities and obligations.

* Social Security’s and Medicare’s unfunded obligations represent how much money must be immediately placed in interest-bearing investments to cover the projected lifetime shortfalls of the programs’ current participants. This includes all taxpayers and beneficiaries in 2018. These shortfalls are equal to:

  • the projected lifetime expenses for the programs’ current participants,
  • minus the current assets of the programs’ trust funds,
  • minus projected lifetime revenues from the programs’ current participants, including what they contribute in payroll taxes, Social Security benefit taxes, and Medicare premium payments.

* Balanced against the value of its commercial assets, the federal government had a combined total of $95.4 trillion ($95,410,000,000,000) in debts, liabilities, and unfunded obligations at the close of its 2018 fiscal year. This shortfall amounts to:

  • $291,102 for every person living in the U.S.
  • $747,809 for every household in the U.S.
  • 4.6 times the size of the U.S. economy.
  • 27 times annual federal revenues.
  • 88% of the combined net worth of all U.S. households and nonprofit organizations, including all assets in savings, real estate, corporate stocks, private businesses, and consumer durable goods such as automobiles and furniture.

* The figures above don’t account for the unfunded obligations of any federal policies or programs other than Social Security and Medicare.

* Social Security’s and Medicare’s unfunded obligations are based on current federal laws, federal data, and federal economic and demographic projections. With regard to these factors:

  • the Social Security Trustees have stated that “significant uncertainty” surrounds the “best estimates” of future circumstances.”
  • the Medicare Trustees have stated that the program’s long-term costs may exceed its current-law estimates “by substantial amounts” because:
    • current law requires future cuts in doctor payment rates that could drive them “increasingly below” doctors’ costs of providing care.
    • the Affordable Care Act (a.k.a Obamacare) progressively cuts Medicare payment rates for “hospital, skilled nursing facility, home health, hospice, ambulatory surgical center, diagnostic laboratory, and many other services” to “less than half of their level” under prior law.
    • over the coming decades, the above payment rate cuts will create the following situation:

Absent an unprecedented change in health care delivery systems and payment mechanisms, the prices paid by Medicare for health services will fall increasingly short of the costs of providing these services. … Before such an outcome would occur, lawmakers would likely intervene to prevent the withdrawal of providers from the Medicare market and the severe problems with beneficiary access to care that would result.

Causes of National Debt

Consequences

* Per the U.S. Government Accountability Office, when the federal government spends more than it collects in revenues, the resulting debt is “borne by tomorrow’s workers and taxpayers.”

* As detailed in publications of the Congressional Budget Office, the Brookings Institution, and Princeton University Press, the following are some ways in which large government debts can affect people:

  • Reduced “living standards” and “wages”
  • “Reductions in spending” on government programs
  • “Higher marginal tax rates” that “discourage work and saving” and reduce economic output
  • “Higher inflation” that increases “the size of future budget deficits” and decreases the “the purchasing power” of citizens’ savings and income
  • Restricted “ability of policymakers to use fiscal policy to respond to unexpected challenges, such as economic downturns or international crises”
  • “Losses for mutual funds, pension funds, insurance companies, banks, and other holders of federal debt”
  • Increased “probability of a fiscal crisis in which investors would lose confidence in the government’s ability to manage its budget and the government would be forced to pay much more to borrow money”

* In 2012, the Journal of Economic Perspectives published a paper about the economic consequences of government debt. Using 2,000+ data points on national debt and economic growth in 20 advanced economies (such as the United States, France, and Japan) from 1800 to 2009, the authors found that countries with national debts above 90% of their economy (GDP) averaged 34% less real annual economic growth than when their debts were below 90% of GDP.

* The United States exceeded a debt/GDP level of 90% in 2010.

* Per the textbook Microeconomics for Today: GDP per capita provides a general index of a country’s standard of living. Countries with low GDP per capita and slow growth in GDP per capita are less able to satisfy basic needs for food, shelter, clothing, education, and health.

* In 2013, the Political Economy Research Institute at the University of Massachusetts, Amherst, published a paper about the economic consequences of government debt. Using data on the national debt and economic growth in 20 advanced economies from 1946 to 2009, the authors found that countries with national debts over 90% of GDP averaged:

  • 31% less real annual economic growth than countries with debts from 60% to 90% of GDP,
  • 29% less real annual economic growth than countries with debts from 30% to 60% of GDP,
  • and 48% less real annual economic growth than countries with debts from 0% to 30% of GDP.