America’s Prosperity Overwhelmed by Federal Debt, Accounting for 93% of National Wealth

By 2024
By John Bouchard
August 9, 2024

According to a U.S. Treasury report, the federal government’s total monetary problem has reached a shocking $142 trillion, incorporating financial obligations, liabilities, and unfunded commitments. This vast sum represents almost the entire net worth of people, which the Federal Reserve estimates to be around $152 trillion, calculated from the nation’s beginning.

A more comprehensive technique for measuring fiscal commitments exposes a shocking $142 trillion in liabilities, a figure that mainly accounts for the monetary burden of present American citizens and considers the government’s concrete possessions. This calculation provides an evident financial legacy that today’s generation is passing on to their descendants. In contrast to other methods of financial obligation, which may span an indefinite period or overlook resources, this figure uses a monetary duty being left to future generations.

Federal employee pensions and other retirement benefits like health care.Environmental liabilities like contaminated nuclear sites.Unfunded responsibilities for social insurance programs like Medicare.
Such “fiscal direct exposures,” as the U.S. Government Accountability Office (GAO) discusses, “represent substantial commitments that ultimately have to be dealt with.” Thus, GAO worries that disregarding them can “make it difficult for policymakers and the general public to sufficiently understand the federal government’s total efficiency and true financial condition.” which is precisely what the media does. Although the Treasury released the report in February, Google News indicates that no significant media outlet has mentioned it. Meanwhile, the same outlets have frequently reported on the national debt and federal budget plan, which are incomplete procedures of the federal government’s fiscal scenario.
Drowning In Debt, Flooded With Illegals

—Federals are primarily based only on money accounting, which is the simplistic procedure of counting money as it flows in or out. Hence, liabilities like pension benefits for federal employees aren’t determined until they are actually paid, which is frequently years after they are guaranteed.
On the other hand, the Treasury report mainly uses accrual accounting, which measures monetary commitments as they are made. This is how the federal government requires big corporations to report their financial resources. In the words of the Financial Accounting Standards Board, which is tasked by the U.S. Securities and Exchange Commission to produce private-sector accounting guidelines, accrual accounting is the “most relevant and trustworthy” way to measure the monetary health of pension.

The same applies to other retirement benefits, like health care. The accounting guideline that governs such benefits explains that “a failure to accumulate” indicates “that no obligation ex before to the payment of benefits.” Even if a responsibility does exist, failing to account for it “hinders the usefulness and integrity” of monetary statements.

The Grand Total

A methodical tally of accrual accounting information in the Treasury report reveals that the federal government amassed $142 trillion in debts, liabilities, and unfunded responsibilities beyond the worth of its commercial properties. This reflects the government’s finances at the close of its 2023 on Sept. 30, 2023.

The main elements of this concern, which are unpacked below, consist of:
– $30.3 trillion in openly held national debt. (As of the date of this article, the debt has increased to $34.1 trillion and is estimated to increase by 1 trillion every 100 days. 
– $16.6 trillion in liabilities not accounted for in the openly held financial obligation.
– $104.2 trillion in unfunded social insurance commitments.
These figures total $147.1 trillion in debts, liabilities, and unfunded obligations. Offsetting this is $5.4 trillion in commercial assets owned by the federal government, leaving a total liability of $141.7 trillion.

Numbers in the trillions are challenging to comprehend, so it’s essential to understand them in context. The figure of $142 trillion amounts to 93 percent of Americans’ net wealth since the country’s founding, estimated by the Federal Reserve to be $152 trillion. This includes all their properties in cost savings, real estate, corporate stocks, personal businesses, and customer durable goods like vehicles and furnishings.

The government’s $142 trillion deficiency likewise amounts to:
– $430,252 for every single person living in the United States.

Each household in the United States liability is $1,098,087.

Two times the annual financial production of the United States (GDP).

– 30 times annual federal earnings.
Drowning In Debt, Flooded With Illegals
—Publicly Held Debt

The Treasury report quantifies the simplest major item: the publicly held debt, which is $29.7 trillion. This is the cash the federal government owes to non-federal entities like people, corporations, state federal governments, and foreign governments.

Publicly owned obligations are a partial measure of the national debt, $6.9 trillion, which omits the $6.9 trillion the federal government owes to federal programs like Social Security and Medicare. The Treasury report also provides information on these intergovernmental financial obligations and combines them with the products below.
Liabilities

Federal Civil servants receive substantial retirement benefits as part of their total compensation packages. When considering these significant benefits, non-postal federal employees typically make 17% more than private-sector staff members with comparable education and job history. Postal workers delight in even greater premiums, varying from 25% to 43%.

In 2022, federal, state, and city governments spent $2.3 trillion on staff member payments, costing each family in the nation an average of $17,299.

According to the Treasury report, the U.S. federal government has a considerable liability of $14.3 trillion in overdue pension and benefit obligations for its employees and veterans, which is not reflected in the country’s publicly reported debt. To cover the existing value of these dedications, each American household would need to contribute ns, the equivalent of $109,000 per household.

The Treasury discloses a federal government debt government of $124 billion owed in accounts payable.

The business faces a staggering $645 billion in costs connected to ecological damage and waste disposal commitments.

– $99 billion in insurance coverage and guarantee program Overalls.

In overall, the Treasury has $16.6 trillion in responsibilities that are not included in the amount of financial obligation held by the public.

for Seniors and Retirees

A comparable but far more pricey situation exists with social insurance programs like Social Security and Medicare. This is because—contrary to common belief—these programs do not conserve employment taxes. Instead, they instantly invest the large majority of those taxes to pay benefits to current recipients. Hence, they are called “pay-as-you-go” programs.
In stark contrast, the U.S. Bureau of Economic Analysis describes that “federal law needs private pension plans to operate as funded plans, not as pay-as-you-go strategies.” As discussed by the American Academy of Actuaries, the factors for this are to increase “advantage security” and ensure “intergenerational equity.”Conversely, Social Security and Medicare have dramatically increased tax burdens on succeeding generations of Americans, producing severe generational inequality. Unless retirement ages are raised or benefits are lowered in some other way, taxes must be increased again to keep the programs solvenFederal actuaries employ various methods to

Drowning In Debt, Flooded With Illegals
—To assess the monetary stress on Social Security and Medihods, with one matching accrual accounting. Called the “closed-group” unfunded responsibility, this procedure computes the funds required to address the shortfalls impacting existing program individuals. According to Harvard Law School professor and federal budget plan expert Howell E. Jackson, this metric represents the financial wealth transferred to future generations. The approximated liabilities for Social Security and Medicare under this measure are considerable, amounting to $49.8 trillion and $53.9 trillion, respectively.

The financial problem of Social Security’s unfunded liabilities amounts to an additional $272,237 per taxpayer, and Medicare’s unfunded liabilities amount to an extra $201,932 per person aged 16 and above, highlighting the considerable financial strain on these programs.

Those shortages remain after the federal government has paid back with interest all of the money it has borrowed from Social Security and Medicare.

Social Security and Medicare differ from real pensions because taxpayers don’t have a legal right to get these benefits. Nevertheless, paying these benefits is an implied commitment of the federal government, and federal law requires that these programs be included in the Treasury report.

According to the Treasury report, the overall unfunded liabilities of Social Security, Medicare, and several smaller-sized social insurance programs amount to a shocking $104.2 trilliPrimarilyally, this estimate does not represent intergovernmental financial obligation, which is included in the report’s overall monetary data. On the other side of the journal, the federal government’s industrial possesses a substantial portfolio, including roughly $922 billion in liquid properties, such as cash and other monetary holdings.

– $1.2 trillion in property, plants, and equipment.

– $1.7 trillion in receivable loans, primarily of student loans.

However, the report doesn’t represent the federal stewards of hip land and heritage properties, such as national parks and the original copy of the Declaration of Independence. While these products have concrete worth, the report discusses that they “are meant to be maintained as nationwide treasures,” not offered to the greatest bidder to cover financial obligations.
The federal government owned $5.4 trillion in commercial properties at the close of 2023.

Adding up the federal government’s debts, liabilities, and unfunded subtracted subtracting the value of its com, yielding assets yields a fiscal shortfall of $142 trillion.

Root Causes

First, we must all address the problem; it’s essential to grasp its underlying origins. Unfortunately, research indicates that most of the electorate is misguided regarding the fundamental factors contributing to government debt. A 2020 survey by Just Facts sampled a representative cross-section of the population revealed that one-quarter of voters mistakenly identify military expenditures as the primary force behind the escalating national debt, a notion often perpetuated by media coverage. In contrast, the actual data shows that military spending has fallen dramatically from accounting for 53% of total federal expenditures in 1960 to just 17% in 2022.

The same survey found that another 25 percent of voters believe tax cuts were the main driver of debt, according to news stories that blame the debt on tax cuts.
In reality, federal revenues have stayed at a roughly level portion of the U.S. economy for the past 80 years:

The data presented earlier highlights the rising cost of government expenditures, with a significant portion allocated to social welfare initiatives. Over the past six decades, these initiatives, which encompass a range of services including healthcare, financial assistance, education, food assistance, housing support, and cultural programs, have seen a substantial increase in funding, growing from 21% of total federal outlays in 1960 to 64% in 2022.

Yet, only 39 percent of voters correctly identify social spending as the primary cause of rising debt. Most of the vast bulk of the government’s unfunded obligations are due to Social Security and Medicare. Thus, the Congressional Budget Office projects that the main drivers of future debt will be Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, Obamacare, and interest on the national debt. Under this weight, the publicly held debt will soar to unprecedented levels over the coming decades.

Increasing debt and costs are the incredible numbers of illegal immigrants that have flooded into the United States, imposing a significant drain on the nation and resources and increasing the costs of social welfare services and housing, transportation, food, education, energy, and loss of taxable income by American citizens who are forced into welfare by being forced out of employment or reduced wages. The estimated costs of these illegals amount to an estimated $5 trillion per year. Eliminating this huge outlay would restore the U.S. economy in a few short years. 

Harmful Effects

Numerous scholarly studies highlight excessive government borrowing, which can lead to undesirable consequences, including stagnant wages, rising prices, sluggish economic expansion, increased tax burdens, and reduced public services. The Government Accountability Office (GAO) also cautions that will ultimately fall on future generations, potentially stifling the standard of living. Notably, the U.S. has seen a significant surge in national debt in recent decades, coinciding growth in GDP, productivity, and household income, as well as a recent uptick in inflation – of unsustainable government debt.

While some believe the U.S. government can spend and borrow with abandon because it can print money, one of the most established laws of economics is that there is no such thing as a free lunch. The prolific economist William A. McEachern explains why this is so:
“There is no free lunch because all goods and services involve a cost to someone. The lunch may seem free to you, but it draws scarce resources away from producing other goods and services, and whoever provides a free lunch often expects something in return. A Russian proverb makes a similar point but with a bit more bite: ‘The only place you find free cheese is in a mousetrap.'”