The Deficit, the Debt, and Unfunded Liabilities

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By Mike Cronin

You’ve heard politicians say we need to increase taxes on the wealthiest Americans. You may have also heard other politicians say our government is spending too much, because we have such a high national debt. Then, invariably, the first group of politicians will respond that they’ve cut the deficit. So how can the debt go up, when the deficit is coming down? What’s the difference?

The deficit is the amount the government has spent over and above what it has taken in during the current fiscal year. For 2013, that amount was over 1/2 trillion dollars. The national debt is the total amount of money, from all years, that the government owes to those from whom it has borrowed (namely US and foreign banks). This number is somewhere around 17 trillion dollars. That’s 17 thousand billion, or 17 million million. Written out, that’s $17,000,000,000,000. Because the deficit is overspending, whenever we have a deficit, any deficit, the debt will go up…even if the deficit is smaller than the previous year. A reduction in deficit spending doesn’t mean the government got it’s financial affairs in order, it just means they slowed down the overspending a little. in fact, the debt can go up even if we have zero deficit in a given year, because the interest on the debt keeps it growing.

If those facts & figures aren’t shocking enough, there is another number we must consider, but you almost never hear about it in the news. That figure represents the unfunded liabilities of the government.  That’s the amount of money it will take to pay for all of the benefits and entitlement payments the government has promised to pay in the future, such as Social Security and Medicare, to people who aren’t old enough, or otherwise eligible, to receive them now. That number is estimated to be anywhere from 55 trillion to 222 trillion dollars, depending on who is doing the estimating and what is included.   That is more than the gross national product of all of the countries in the world, combined.  In other words, our government has overspent, or will overspend, more money now and in the future than the total economic output generated by the entire world!

So, do you think  we have a revenue problem, or a spending problem?

Deficit: What the government overspent in fiscal year 2013 (about $700 billion, according to the US Treasury Dept.)

Debt: What the government has overspent in total (about $17 trillion)

Unfunded Liabilities: What the government has promised to pay in the future over and above what it is projected to take in ($55-222 trillion)

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