The US is already bankrupt (update)

Let's just review these numbers:

12.7 Trillion - Current US Federal Government Debt (See http://bit.ly/bTUi68).   +
99  Trillion - Unfunded Liabilities of Social Security, Medicare and Medicaid (See http://bit.ly/atAyCC) . +
2.3 Trillion  - Health Care Bill costs estimated by Heritage, but who really knows (See http://bit.ly/dx0zc1). +
6.0 Trillion - Fannie Mae, Freddie Mac and Ginnie Mae loan Guarantees
0.5 Trillion - CITI, AIG, GMAC debt now owned by the gov't (my own estimate, may revise upward) =
120.5 Trillion - Total Liabilities

OK, that looks pretty bad so let's see how we are going to pay for this. 
$2.5 trillion - Tax Revenues 2008.  I'd use the lower 2009 numbers, but we are wildly optimistic here. 

Using 100% of our tax revenues and assuming no interest, it takes 60 years to pay this off.  Increase the rate to 5% or 6% and this loan will never get paid off.  Wouldn't it be ironic if the last NegAm loan underwritten during the crisis was funded by the Chinese. 

To bring the point home (no pun intended), this is the equivalent of buying a 1.2 Million dollar house with only $25,000 in annual income.  You could pay it off over 60 years, but it would leave you zero dollars to buy food.  For the government that means no money for defense, IRS, INS, Dept of Education, TSA, National Parks, or health care.   Hmmm...  Imagine what that might be like.

OK Now What? 

There is only one thing to do.  Inflation won't work because 65% of our debt is inflation protected (See http://bit.ly/cpSeu1).  Anyway, Social Security and Medicare/Medicaid are tied to inflation already.  The one solution is to cut the government behemoth.  Cut benefits to Social Security.  Cut Medicare.  Cut Medicaid.  Let the Europeans defend themselves. 

The Health Care Bill is another example of government heading in the wrong direction.

Comments

  1. Man, Taylor, you make it sound so good!!! No IRS, Dept of Ed, TSA, Healthcare sounds great!!

    ReplyDelete

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