Christopher Cox was the former chairman of the House Republican Committee for Policy and former member of the Securities and Exchange Commission before returning as President of Bingham Consulting. Recently he wrote of the total debt that the US Congress has, its relation to GDP and the current fiscal crisis that dominates our news cycle. This is the tonic of leadership, to speak honestly regarding the near permanent denial of reality that underwrites the life of politicians and those who love life in Washington.
Here’s the good news: the number circulating as the harbinger of the ‘fiscal cliff’ is $15.96 trillion. That number reveals our current budget deficit, our debt and its relation to GDP being 100%. Cox is revealing that this number is only 1/5 of the TOTAL! It’s only a reflection of this years budget deficit, it comes no where near the real total number. Hang on for the good news. . .
The actual liabilities of the federal government including Social Security, Medicare and federal retirement benefits exceeds $86.8 trillion or 550% of GDP! Did you get that!
The reporting of the budget deficit is only 1/5 of the total! How’s that for a shell game.
This actual figure doesn’t even appear on the federal budget. To find it you have to go to the annual Medicare Trustee’s report (issued every April) to view the unfunded liabilities. That means Medicare (part A, the hospital portion; part b, medical insurance; part C, the prescription drug coverage) Social Security along with federal employee retirement benefits.
The sheer magnitude of our problem eclipses the value of the entire United States capital market!
Now for the bad news: our cupboard is bare; both these programs and the retirement benefits along with the entire federal government is bankrupt. We simply don’t have the money to cover the bills accruing. How is this possible? Its possible because 100% of government revenue goes to pay for the existing liabilities EACH YEAR!
What does this mean? It means hyperinflation because the federal government must print money to cover the expenses it cannot afford through revenue (taxation.) Raising the rates and/or devaluing the currency won’t fix it. Its either reform or nothing; nothing being the reality of unfunded liabilities which is already showing up in States throughout our Union.
What are American liberals proposing? They’re proposing that all unfunded federal liabilities get nonmarkable Treasury debt to hold them over until Congress swaps these unmarkable Treasury debt for markable Treasury debt that the Treasury must sell in order to finance. We must beg other rich capital markets like China to give us our own currency in exchange for debt just to pay for social entitlement programs. <strong>Ad nauseum</strong><em>.
We must add that this massive shell game is in addition to unfunded general cash deficits that continue to dominate our fiscal life. These problems will dominate the capital markets of the world for decades to come if not resolved.
For those that remember Whittaker Chambers, the west has arrived at an inflection point of total crisis! In case the numbers got lost in your reading here it is: we owe $86 trillion, we take in about $7 trillion.
Welcome to Weimerica!