Baby’s First Number
By Pat Racimora on August 31, 2009 at 5:31 PM in Deficit, Economy, Medicare, National Debt
It used to be, not so very long ago, that the first numbers assigned to each newborn were date and time of birth, weight, and Apgar test scores (ratings on muscle tone, respiration, reflex irritability, pulse, and skin color).
Now, the instant babies pop out their sweet heads (or butts, out of respect for those of us born breech), they are slapped with a bill. A really big bill.
Actually, $186,000 is what each and every one of us owe right now (add an extra 10 grand if you wait a year before paying) according to a new report out by Peter G. Peterson Foundation. The PGPF figures our debt a little differently by including projected governmental commitments, believing the actual total to be a mind-blowing $56.4 trillion.
We know that the federal government carries both publicly held debt and debt for money it has borrowed from itself. Together, these sums are closing in on $11 trillion. This is the figure most commonly cited as our “national debt,” but actually, that’s only the start of the REAL national debt.
How exactly does this $56.4 trillion bill add up? First, there are the federal government’s known liabilities that it is legally obliged to fulfill. These include publicly held debt, military and civilian pensions and retiree health benefits. As of September 30, 2008, these liabilities added up to $13.5 trillion.
Then there are various commitments and contingencies – i.e., contractual requirements that the government is expected to fulfill when, and if specified conditions are met. These include federal insurance payouts, loan guarantees, and leases. As of September 30, 2008, they added up to $1.4 trillion.
So where does the remaining $43 trillion or so come from? That’s what the government has promised to pay in Social Security and Medicare benefits in excess of related revenues. As of January 1, 2008, current and promised future Social Security benefits amounted to $6.6 trillion. And between Medicare’s three programs (hospital insurance, outpatient, and prescription drug), current and future promised Medicare benefits amounted to $36.3 trillion.
Unless we make major reforms soon, the PGPF reaches a sobering conclusion.
Making extraordinary commitments for the future before that future has arrived goes against the very nature of democracy. Each generation must have the flexibility to set their own priorities according to the opportunities and needs of their time.
What will this little baby’s life be like when she is my age? And yet how do we soften the future blow in a way that doesn’t starve us now or weaken our global position to the point where we will have little to offer our children and grandchildren?
Or is the Peterson Foundation messing unfairly with the numbers to further scare old people (or make them feel guilty)? For example, people will continually be paying into Social Security. And, Medicare is not free to its recipients. I’m not sure about the figures the foundation used, but I am pretty sure we are in a lot of trouble.
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