Living in Debt

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:

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.

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).

It may still be possible to turn around USA Inc. 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?

Raleigh, NC