A Show of Hands Please: What Comes After Trillions?

Yes, it’s quadrillions, and when we combine governmental, consumer, and private debt, with the government’s unfunded liabilities, we are approaching one-tenth of a quadrillion dollars! Eye-popping stuff! Sadly, this information doesn’t make its way into the public consciousness for a whole host of reasons. Personally, I think that much of the electorate is disinterested, shallow, and lazy. Don't get me wrong, I can be pretty damn shallow, but at least I understand our fiscal woes.

I’m currently engrossed in reading “Forgive Us Our Debts: The Intergenerational Dangers of Fiscal Responsibility”. I know, you really want to invite Peter T. to your next party, NOT , but nevertheless, this is essential reading as it clearly highlights the enormous dark cloud that hovers over America’s future.

I want to share a brief paragraph as I think it clearly conveys the enormity of the problem:

p. 2 Which brings us to today, when – despite centuries of distaste for debt-the United States will be nearly $10 trillion in debt by Election Day 2008. It has promised another $50 trillion or so in explicit and implicit benefits to be paid in the future-a number that has almost doubled during the presidency of George W. Bush.; in fiscal parlance, these are “unfunded liabilities,” which businesses and state and local governments are forced to report on their books-but the federal government is not. To put these numbers in varying perspectives, $50 trillion is equal to nearly 100% of Americans’ total net worth-everything that we as individuals, as businesses, and as a country own. It also adds up to a cool half a million dollars in debt for every American household. These numbers exclude an additional $2 trillion in state and local government debt and unfunded liabilities for employee pension and health care benefits. They also exclude American’s $2 trillion in consumer debt and $10 trillion in total personal debt, which rose to 130 percent of disposable income in 2007, a statistic made more haunting by the late-2007 credit crunch that may lead to at least one million home foreclosures and two million personal bankruptcy filings in 2008. While deficits have dipped somewhat towards the end of the Bush administration, they are poised to explode over the next ten to twenty years, as health care costs march upward and baby boomers retire, potentially adding trillions of dollars of additional debt.

Here are a few more statistics:

The 2009 budget for the US is approximately $3 trillion.

Here is where the money goes:

Medicare/Social Security/Medicaid 42 % Defense 21% Domestic Discretionary Spending 16 Other Mandatory Spending 12 % Interest on the debt ($260 billion) 9 %

As you can see, there is not a lot of room to play with discretionary spending. Something will have to give, big time! Demographics are working against us as the population is aging and boomers are beginning to retire.

By and large, the candidates won’t really address this now as the public will punish any talk of the sacrifices that must be made. Instead, we get the “happy talk” of expensive new spending plans, and, of course, pledges to permanently maintain tax cuts. American voters have placed an unforgivable burden on its children, and grandchildren. The debt increases $10,500 each second! We've bought out the store, and paid for it with the credit cards of those who have not even been born. I’ve used Walt Kelly’s quote before, and it seems apt now, “We have met the enemy and he is us.”

Peter T.