by Dr. Mark W. Hendrickson
Brace yourself. This isn’t going to be pleasant. If you’re in a bad mood or get easily upset, you may wish to pass on reading this article.
The country is in even worse shape economically than we thought. We awoke on Feb. 14 to find that this year’s federal budget deficit is going to be larger than previously projected—a record $1.65 trillion.
Recently, the official accumulated debt of the federal government passed the $14 trillion threshold. A trillion is a gigantic number. If you stacked $100 bills flat on top of each other, then turned that stack on its side, a trillion dollars would stretch from where I live in western Pennsylvania to somewhere past St. Louis. That’s just one trillion. Multiply that by 14, and it would stretch from here to Honolulu and back with plenty to spare.
The really bad news is that Uncle Sam’s debt is significantly greater than $14 trillion, and I am not referring to the tens of trillions of dollars of unfunded liabilities representing undeliverable government promises. According to data released by the U.S. Treasury on January 21, the public debt is $20.7 trillion, an increase of $3.3 trillion in just the last year.
The larger sum—actual existing debt of $20.7 trillion—includes such off-budget items as bailouts, Fannie Mae and Freddie Mac, student loans, and who knows what else? I have to say “who knows what else,” because the leviathan federal government long ago became too large to keep track of. For example, 25 years ago the Grace Commission, instituted by Ronald Reagan in the hope of identifying ways to streamline the federal government, was unable to tabulate how many people worked for the federal government, although they did manage to identify 963 federal programs that redistributed wealth.
Not only is our current national indebtedness more than 40 percent greater than the already horrendous commonly cited figure, the Social Security program is in worse shape than expected, too. As recently as a month or two ago, it was widely accepted that payouts from Social Security would start to exceed revenues in 2016. In a stunning development, the nonpartisan Congressional Budget Office released a report on January 26 which projected that revenue shortfalls will begin this year and continue uninterrupted until all unfunded IOU’s are exhausted by 2037 (if not much sooner). The CBO projects what would have been a $45 billion shortfall this year, but thanks to the terrible deal that President Obama and congressional Republicans forged in December—the one that included a 2-percent reduction in Social Security withholding from workers’ paychecks—this year’s Social Security red ink is expected to hit $130 billion.
At the state level, finances are deteriorating at a sickening speed. Governors are starting to ask the Obama administration for permission to drop people from Medicaid (280,000 people in Arizona alone). Moody’s, the debt-rating agency that seems to wait until after a collapse has happened to lower its rating of an entity’s finances, is making noises about downgrading the credit rating of several states.