It’s difficult for the average American voter and taxpayer to get a clear understanding of just how much financial trouble out country is in. We have been told that the current national debt is more than 13 trillion dollars, but most of us have a hard time imagining just exactly how much money that really is.
We have been told, for example, that in the first 19 months of the Obama administration, the federal debt held by the public increased by $2.53 trillion, which is more than the cumulative total of the national debt held by the public that was amassed by all U.S. presidents from George Washington through Ronald Reagan. We have also been told that each of us owes $43,537.96 to our nation’s creditors, and that the interest on this brobdinagian obligation is $4.12 billion per day.
Now, from Kevin Williamson, over at National Review Online, comes a startling fact that gives these giant numbers some perspective: We now owe more money than all the money in the world combined.
Williamson cites an analysis in Forbes Magazine that indicates the actual federal national debt is much higher than the $13 trillion figure commonly accepted. Forbes analyst Laurence J. Kotlikoff figures that the real liability facing our government is $70 trillion. This represents the present value difference between all the government’s projected future spending obligations and all its projected future tax receipts. This fiscal gap takes into account Uncle Sam’s need to service official debt—outstanding U.S. government bonds. But it also recognizes all our government’s unofficial debts, including its obligation to the soon-to-be-retired baby boomers to pay their Social Security and Medicare benefits.
Given current policies, each of the 78 million boomers can expect, on average, to receive $50,000, in today’s dollars, from these programs in each and every year of retirement. Multiply 78 million boomers by a $50,000 annual payment and you get close to $4 trillion per year. This helps you see why our nation’s true indebtedness is so extraordinarily high.
Taking that analysis to be the correct statement of our national debt, Williamson computes that the entire supply of money in the world (“broad money,” i.e., global M3, meaning cash, consumer-account deposits, checkable accounts, CDs, long-term deposits, travelers’ checks, money-market funds, the whole enchilada) is estimated to be just under $60 trillion. He then arrives at the conclusion: “The optimistic view is that our outstanding obligations amount to more than all of the money in the world.”
And, with the global GDP also at about $60 trillion, this means that our federal obligations outpace the entire annual economic output of human civilization.
Way to go, Barry! You brought us the change you promised; and we are all looking toward the November elections with a great amount of hope in our hearts.
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