Monday, March 29, 2010

$438,000 Per Person to Cover Unfunded Entitlements

Bill Frezza of RealClearMarkets talks about the numbers in the age of "progressive" (read socialist) government:
With legislative success however tarnished by rancor and dissent, the hopes and dreams of generations of Progressives have been fulfilled. The trifecta of Social Security, Medicare, and the first installment of Universal Healthcare are now the law of the land.

Based on a common set of financial principles and an unshakable faith in the wisdom of government the productive power of the young, the healthy, the successful, and generations yet unborn are now fully lashed to the yoke of redistribution. The poor, the old, the infirm, the government employee, the union worker, the dropout, and the slothful have cause to rejoice as their party has delivered the goods.

Or so they think. Let's take a quick look at the numbers.

According to the most recent Social Security and Medicare trustees report, the unfunded liabilities of these New Deal and Great Society programs exceed $100 trillion dollars. Add the unfunded Medicaid mandates imposed on the states along with the pension liabilities of millions of federal, state, and local government employees and the total becomes almost impossible to comprehend.

Try this on for size. If you confiscated the entire Gross Domestic Product of the US for ten years you couldn't cover all these liabilities.
If the entire GDP of America were earmarked for payment of the unfunded liabilities of the biggest sectors of our economy, it still would not be enough.

Of course, the numbers were are are talking about boggle the mind. The GDP for 2009 based on the fourth quarter estimate from the Bureau of Economic Analysis is $14,453.8 billion or $14.4 trillion dollars, written out that would look like this:


The population of the United States is 330 million (a pretty big number itself) which looks like this:


So let's do a little math with these numbers. Ten years of GDP (assuming no growth or change at all, not likely, but illustrative for our purposes) looks like this number:

$144,538,000,000,000.00 (that is $144 Trillion dollars)

Assuming no population growth (also unlikely, but helpful for our purposes), if you divide ten years of GDP by the current population, you get a very large number as well: $437,993.93. What does that number represent?

That is the amount that every man, woman and child in America right now would have to pay in to the government to cover all the estimated unfunded liabilities in Social Security, Medicare, Medicaid, pensions for government workers, etc. That number does NOT represent what needs to be taxed by the various levels of government to provide all those other servcies governments do like police, military, schools, road maintenance, etc. So in addition to all the other taxes we pay, we would have to come up with $438,000 per person or $1,752,000 for a family of four, to cover the unfunded entitlement spending.

But let's also be realistic--a large percentage of that 330 million population are retired, or minor children with no income, or people who don't pay taxes, are here illegally, so the real number of the population who would have to shoulder the burden is probably half of 330 million or about 165 million--so double that number of $438,000 to nearly $900,000 PER PERSON.

How's that for a number that is hard to comprehend.

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