Promoting freedom, innovation, and growth

Connect with IPI

Receive news, research, and updates

October 10, 2014

Taxpayers' Share of Federal Debt Is Down - To One Million

  Rare

A year ago I pointed out that each U.S. taxpayer’s share of the federal government’s long-term unfunded liabilities was about $1.1 million. The good news is the National Debt Clock says long-term debt per taxpayer is down: to $986,000.

Feel richer? You shouldn’t.

When the public and media mention federal debt, they are usually referring to the amount of money the federal government has actually borrowed and agreed to pay back. That figure continues its relentless climb, to $17.7 trillion—up from $10.6 trillion when President Obama took office.

But that figure pales in comparison to the federal government’s long term unfunded liabilities—money the government is obligated to pay over and above the revenues it is estimated to receive. Those liabilities stem from the country’s two major senior entitlement programs: Medicare and Social Security.

According to the U.S. Debt Clock, total long term unfunded liability is $115.1 trillion, or a $986,000 million liability for each U.S. taxpayer.

The Debt Clock says Social Security is looking at $15.1 trillion in unfunded liabilities, while Medicare faces $80 trillion. And Medicare’s prescription drug benefit, which passed in 2003, adds another $20.1 trillion.

The question that should consume everyone under the age of 30 or 35 is: Will you ever see a dime from those programs?

The answer: Maybe a dime, but not much more.

The Supreme Court has ruled that you have no right to receive anything from either program. Congress can choose to cut benefits or eliminate the programs completely at any time it chooses—though as a practical matter eliminating either program is probably politically impossible.

But cutting benefits, taxing more of the benefits seniors’ receive, or raising the payroll tax on workers are all possibilities—or should I say probabilities. And that just means younger workers will have to pay more for longer and get less back.

Of course, we could end this fiscal Ponzi scheme if a presidential candidate would campaign on allowing younger workers to put most or all of their payroll taxes into a personal retirement account—and then push it through if elected.

Wouldn’t it be good policy, as well as good finances, that instead of every taxpayer owing $1 million, they owned $1 million—the result of a lifetime of saving their payroll taxes rather than handing them over to big-spending Uncle Sam?


 

  • TaxBytes-New

Copyright Institute for Policy Innovation 2017. All Rights Reserved Privacy Policy Contact IPI.

e-resources e-resources