US unfunded liabilities reaches record $61.6 trillion as nation heads into bankruptcy collapse

Friday, June 17, 2011 by: J. D. Heyes
Tags: unfunded liabilities, collapse, health news

(NaturalNews) They began with the passage of the Social Security Act under Depression-era President Franklin Delano Roosevelt in the 1930s but grew dramatically when Medicare and Medicaid legislation under Lyndon B. Johnson was passed in the 1960s. More recently, George W. Bush and Barack Obama expanded them even further when they pushed for huge new prescription drug benefits and near-universal healthcare, respectively.

What are they? Unfunded government liabilities and they have grown to unimaginable - and unmanageable - proportions.

According to a new analysis, promised federal benefits now total $61.6 trillion, with a massive $5.3 trillion in additional promises made just last year alone.

Of those added in 2010, Medicare accounted for $1.8 trillion of the total and Social Security $1.4 trillion, with federal military and retirement programs adding their share as well.

All told, each American household would have to cough up $527,000 just to meet the government's promised obligations. According to the analysis, that's more than five times what average American households have borrowed for everything else, including mortgages, car loans and other debt.

These unfunded liabilities come on top of successive federal budgets that have posted record deficits in recent years. Last year alone, the government spent $1.5 trillion more than it collected in revenues. Businesses can't operate for long with successive massive deficits and neither can average American households. As a lawmaker or president, why would you expect that the national government could?

To some people these liabilities are no big deal, if you can believe that.

"The false claim that Social Security and Medicare are about to bankrupt the United States has been repeated for decades by conservatives and libertarians who pretend that their ideological opposition to these successful and cost-effective programs is based on worries about the deficit," Michael Lind, policy director at the liberal New America Foundation's economic growth program, told USA Today recently.

"Successful?" "Cost-effective?" How is it possible to run trillion-dollar deficits in each of these programs, year after year, and still label them cost-effective and successful?

Moreover, the true amount of the unfunded liabilities is likely much higher - perhaps even as high as $119 trillion, according to Michael Tanner of the CATO Institute.

"...[T]o focus solely on debt is to treat a symptom rather than the underlying disease. We face a debt crisis not because taxes are too low but because government is too big. If there is no change to current policies, by 2050 federal government spending will exceed 42 percent of GDP," he writes.

Right now, the only reason Washington gets away with spending so much more than it takes in is because someone - in this case, China primarily - finances much of our debt. But there are indications those days are coming to an end.

Who will pay for all of these unfunded liabilities then? All of us, if we can even afford it.

"It may well be politically convenient to continue ducking entitlement reform. But doing so will condemn our children and our grandchildren to a world of mounting debt and higher taxes," Tanner said.