A friend recently posted a succinct summary of the current fiscal catastrophe in the United States. Below are the key points for 2011 (in trillions of USD):
US tax revenue: $2.17
Federal budget: $3.82
New debt: $1.65
National debt: $14.27
Recent budget cut: $0.038
That’s a beautifully disgusting snapshot of the effect of fiscal irresponsibility over decades. If you want to check those stats, or for more information, visit: http://1.usa.gov/vs6GXl
Now consider how much of a difference that $.038T cut will make. Not much. Especially when you consider the net present value of unfunded future liabilities associated with Medicare: $36.4 trillion, and Social Security: $15.1 trillion. http://1.usa.gov/v34vPY
That’s a total net present value of $51.5 trillion in unfunded future liabilities associated with only social security and medicare, in-case you are counting (presumably everyone except our political leaders). That’s a serious cash flow problem when annual tax revenue is $2.17 trillion.
Paying off these obligations would cost about $440,000 per household. I hope you have an extra $500,000, because Uncle Sam needs it to support his habits.
Recall that GM filed for bankruptcy for similar reasons (i.e., decades of mismanagement which led to assets of $82.2 billion against liabilities of $172 billion which led to chapter 11). http://econ.st/ssWfBK
It may still be possible to turn around USA Inc. http://www.kpcb.com/usainc/ But, fiscal discipline, lean management and unity, all of which seem outside the bounds of polarized US politics, are desperately needed. New Year’s resolution, anyone?