That is the unfunded liability for Social Security:
Economists generally believe that the appropriate way of calculating the program’s long-term cost is to do so in perpetuity, adjusted for the rate of interest, something called discounting or present value.
Social Security’s actuaries make such a calculation on page 64. It says that Social Security’s unfunded liability in perpetuity is $17.5 trillion (treating the trust fund as meaningless). The program would need that much money today in a real trust fund outside the government earning a true return to pay for all the benefits that have been promised over and above future Social Security taxes. In effect, the capital stock of the nation would have to be $17.5 trillion larger than it is right now. Alternatively, the payroll tax rate would have to rise by 4%.
To put it another way, Social Security’s unfunded liability equals 1.3% of the gross domestic product. So if we were to fund its deficit with general revenues, income taxes would have to rise by 1.3% of GDP immediately and forever. With the personal income tax raising about 10% of GDP in coming years, according to the Congressional Budget Office, this means that every taxpayer would have to pay 13% more just to make sure that all Social Security benefits currently promised will be paid.
And if you think that’s bad, the unfunded liability of Medicare is $36,400,000,000,000.00 – putting the total SS/Medicare liability at $53,900,000,000,000.00. That’s quite a chunk of change, boys and girls; but not the end of it. The author of the linked piece points out that when you add in Medicare B and D you get $106,400,000,000,000.00, a figure a bit more than twice as large as the privately held wealth of the United States of America. And do keep in mind that this is just the Social Security/Medicare part of our government…doesn’t include national defense or law enforcement (you know, the two actual primary activities of government). Bottom line is that we’d need to increase income taxes by 81% to cover the shortfall. Or massively cut benefits – or do a terrible combination of both (everyone paying more for less).
It can’t be sustained – only an immediate and massive retrenchment of government can allow us to get out of this hole and permit us to set up a fully privatized SS system. I did a bit of tongue in cheek budget balancing the other day but in real terms, spending has to come down by at least 50% – and this means next year we should spend about $1.5 trillion dollars, without impairing national defense or law enforcement. DoD and Justice can do with some cuts, but the money is going to actually have to come out of Dept of Education, Transportation, Housing…all the liberal flapdoodle piled on over the past 75 years. It has to go. The whole thing was a massive vote-buying scam, and now the bill for those purchased votes has come due.
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