Generationship – Reducing our debt and deficits in a manner the equitable across generations by having a dialogue between generations about the trade-offs and sacrifices that will need to be made.
Our country is confronting huge spending challenges. Not only is the national debt over $14.3 trillion, our entitlement programs mainly Medicare and Social Security will be facing trillions in future shortfalls. The trustees’ report of each program predicts that they will run out of money to fully fund their obligations in 2024 and 2036 respectively. Because each of these programs rely on a pay-as-you-go system where current workers support those who are retired and shifting demographics (more retired Americans pulling from the system) we will need to have a serious conversation between generations.
It’s going to require the Millennials and their parents to talk about benefits they would like to have and the taxes we would like to pay. It is also going to involve our elected officials to engaging Millennials and beginning to talk about the national debt with them. They are going to have to stop referring to those who will inherit America’s massive debt as the children and grandchildren. After all if you’re between the ages of 19-33 you are one of the children!
In 2011 the US borrowed $1,316,000,000,000 trillion. A little less then we borrowed in 2010 at over $1,400,000,000,000 trillion.
Both years that was more than enough to cover our discretionary spending. Which means we borrowed to fund most government services including defense, education, infrastructure, energy and research & development.
Without changes to current fiscal policies public debt* will reach 200% of GDP by 2038.
In 2010 publicly held debt rose from $7,600,000,000,000 to $9,000,000,000,000.
Gross debt was at nearly $15,000,000,000,000 by the end of 2011.
Interest payments on our debt are predicted to rise from $196 billion to $917 billion in 2021. That’s assuming that countries doesn’t begin to demand higher yields on our debt. We think that number will be closer to $1 trillion in 2021.
To put interest into perspective the US spent $477 billion on all discretionary programs and $835 billion on defense in 2011.
Medicare and Medicaid, by far our largest problem in terms of the debt, are expected to cost taxpayers around $38 trillion over the next 50 years
Over the long haul Social Security is about $9.2 trillion short, requiring the government to come up with $114 billion a year on average to cover the gap
In reality the US government has a debt of over $76,000,000,000,000 including unfunded liabilities*
*Public debt (Find Debt Review programs) is what the government has borrowed through the sale of treasury bonds ie. personal loans. Gross includes what the government has borrowed from itself, mainly from social security.
* An unfunded liability is a debt the government has with no way to pay for. Typically this term refers to Medicare and parts of Social Security. “But I pay a lot of taxes for both those!” You’re right. These programs got this way do mostly to mismanagement by the government and our politicians promising more than they knew that could deliver.
Sources: Office of Management and Budget, Financial Report of the United States Government
The nation’s debt limit, sometimes called the debt ceiling is very similar to the limit on your credit card. Only about $16 trillion more then yours. It’s the max amount that the US can borrow on its card, the United States of American Express. Unlike you however, when America maxes out its card it just calls up congress and asks for an increase in the limit.
For a brief bit of history on the debt limit we have to go back to last summer when our so called elected “leaders” brought us within a day of defaulting on our obligations. Had they defaulted, it would have been the first time in our nation’s history and very bad for all of us. In the end after numerous press conferences and name calling from both sides Congress voted to raise the debt ceiling in the Budget Control Act of 2011. This time it was between $2.1 and $2.4 trillion bringing the total limit to between $16.4 and $16.7 trillion.
The silver lining in this deal was that it included $1.5 trillion in deficit reduction. It also established what was dubbed the “Supercommittee,” which was supposed to find where to make the cuts and many hoped they would find even more. All said and done the Supercommittee failed to agree on any cuts and automatic cuts will start to kick in beginning in 2013. That is unless Congress makes another law that bypassed this one. Something they have done when faced with cuts in the past. Prior to last summer Congress voted to raise the debt ceiling by $2 trillion in January of 2010. That’s right they blew through $2 trillion that fast!
By now you might be saying to yourself “Why raise the debt ceiling at all? Can’t we just live on tax revenue? If the government doesn’t raise the debt ceiling then that will stop us from going further into debt?” That might work down the road but not for the immediate future. Something to note about the debt limit is that it’s for commitments we have already made. It is like you using your credit card to pay for something you have already committed to. Say the rent you pay for the year long lease you have signed or your 20 year home loan.
Co-Founder of WeCantPayThatTab.org Ryan Schoenike speaks to the president’s Fiscal Commission about the lack of youth representation on the commission and the need for congressional leaders to engage young Americans and get out and explain the national debt problem to Americans.