The longterm U.S. debt under President Obama’s latest spending plan is far worse than his budget suggests, reaching a total of about $84 trillion – that is, 8.4 percent of a quadrillion dollars, or $0.084 quadrillion.
Yes, it’s time to start using the quadrillion number, because with trillions getting added to the debt at an accelerating pace, the numbers are starting to become meaningless again unless put in the proper perspective.
The Obama budget forecasts a startling federal debt of just over $25 trillion. But that’s only the beginning of the frightening story of the government’s longterm obligations.
Over future decades, Medicare – before taking into account Obama’s “cuts” – has an unfunded liability of close to $43 trillion, according to the most recent Social Security and Medicare actuaries report. That is what the government is currently obligated to pay out to this and the next couple of generations – but for which it has no method on the books of raising money. It just owes that amount, and would currently have to borrow to pay it.
Similarly, the unfunded liability of Social Security is about $20 trillion. And the government has about $6 trillion in unfunded obligations for federal worker pensions. All told, we’re in the hole for about $94 trillion, or nearly $0.1 quadrillion.
Obama’s budget makes cuts to Medicare over the next decade totaling about $370 billion – as you can see, a minuscule portion of the total obligation. And the cuts are mainly to health care providers, which doesn’t amount to the type of serious “reform” needed to save the program. What’s more, the reductions are unlikely to be fully realized because of the lobbying muscle of doctors, hospitals, and other providers.
Obama’s call for chained CPI is, however, a serious proposal that could reduce Social Security’s imbalance by 20-25 percent. So let’s assume under Obama’s plan, Social Security would have an unfunded mandate of about $15 trillion. And let’s be generous and lop $5 trillion off the longterm obligations of Medicare, bringing its shortfall to about $38 trillion.
We’re still at $84 trillion, or $0.84 quadrillion, in total indebtedness.
Now you understand why Republicans are demanding Obama get serious about reducing the debt and enacting entitlement reform, and why his current plan doesn’t seem very serious at all.