In the US, we have two national programs to care for the elderly. Social Security provides a small pension, and Medicare covers medical expenses. All workers pay taxes that supposedly fund the benefits we may someday receive.
The problem is that’s not actually true. Neither of these programs is comprehensive.
The End of Government Entitlements
Living on Social Security benefits alone is a pretty meager existence.
Having turned 68 a few days ago, I guess I’m contributing a bit to the trend
Limited though Social Security and Medicare are, we attribute one huge benefit to them: They’re guaranteed. Uncle Sam will always pay them—he promised. And to his credit, Uncle Sam is trying hard to keep his end of the deal.
Uncle Sam’s Debt Nightmare
In fact, Uncle Sam is running up debt to do so. Actually, a massive amount of debt:
Federal debt as a percentage of GDP has almost doubled since the turn of the century. The big jump occurred during the 2007–2009 recession, but the debt has kept growing since then. That’s a consequence of both higher spending and lower GDP growth.
In theory, Social Security and Medicare don’t count here. Their funding goes into separate trust funds. But in reality, the Treasury borrows from the trust funds, so they simply hold more government debt.
Today it looks like this:
- Debt held by the public: $14.4 trillion
- Intragovernmental holdings (the trust funds): $5.4 trillion
- Total public debt: $19.8 trillion
Total GDP is roughly $19.3 trillion, so the federal debt is about equal to one full year of the entire nation’s collective economic output. That total does not also count the $3 trillion-plus of state and local debt, which in almost every other country of the world is included in their national debt numbers.
Read the rest of the article on Forbes: Your Pension Is a Lie: There’s $210 Trillion of Liabilities Our Government Can’t Fulfill | Forbes