Before I continue with my "shocking tell-all" of governent financial malfeasance, let's do a quick recap of my previous posts.
The Federal government’s road to fiscal mismanagement started with Social Security. It was supposed to be self supporting, but the payments from withholding taxes will be significantly less than needed. The program failed to anticipate rapidly increasing life spans, inflation, and declining workers per recipient. As the problems became evident, fixes were insufficient. Oh, and the $2.5 trillion from excess payments needed to meet future promises has already been spent.
Medicare and Medicaid program costs were also stupendously underestimated, and they continue to rise dramatically. The so called War on Poverty is still waging after 40 years, with no victory in sight. Government lending programs for agriculture in the 70’s and 80’s ended up hurting farmers, and the mistakes from those programs were repeated in the recent housing crisis. And despite all these screw-ups and a poor economy, new spending programs keep getting approved and discretionary spending keeps rising!
This reckless spending has primarily been funded by government debt holders through deficit spending. The voters' pocket books have been spared much of the ultimate costs so far by design. “By design” I mean politicians wanting to get re-elected. We now have over $9 trillion in publicly held debt.
Wow, as bad as this all is, it couldn’t get any worse, could it? Well, I’m afraid it could. Besides the stated debt above, there are the unfunded liabilities. These are promised or expected future costs, such as pensions, medical benefits, guarantees, or major contingent costs. Congress has promised these payments no matter what happens to the economy or tax revenues. Although Congress requires corporations to fully fund pensions, promised medical benefits, or other contingent liabilities, they place no such requirement on their own Federal programs. They may have some so called “Trust Funds”, but they are in no way fully funded, and have just been lent back to the same government and spent. Federal unfunded liabilities total over $50 trillion:
Social Security - $8 trillion over the next 75 years, based on the latest Trustees Report.
Medicare - $38 trillion over the next 75 years, based on last year’s Trustees Report
(It’s only $31 trillion this year, down due to the health care bill?)
Fannie Mae and Freddie Mac – Up to $5 trillion.
Federal Pensions – These are not pre-funded and come out of yearly revenue.
Federal Student Loans - With the economy the way it is and college costs so high, how many students will actually be able to pay off their loans?
Altogether, these unfunded costs are several times the actual debt on the books right now! If that doesn’t scare you, here are some other future costs to worry about:
Health Care Reform - Does anyone believe that adding more people to the insurance rolls and expanding covered services will do anything except increase costs?
Immigration Reform (meaning some kind of amnesty for illegal aliens) - In the best case, it means increased costs for Earned Income Tax Credits and Social Security outlays for those that work. In the worst case, it means massive medical and other public assistance.
State and Local Pensions – At least $1.5 trillion ($500 billion alone for California). Can anyone be sure we won’t have a Federal bailout?
I’m sorry to have to point this all out. Have a nice day!