Yet we allow the politicians to represent it as the truth, whole truth and nothing but the truth each year.
But while we allow that to happen, most of us know that the real truth of the matter is as simple as 1-2-3.
1- We know that the government runs huge deficits each and every year.
2- We also know that We the People as taxpayers don't like tax increases and that We the People as recipients do like to get high and higher entitlements such as Social Security and Medicare.
3- Finally, we know that the first order of business for a politician is to get elected, and the second order of business is to get reelected.
As a result of this 1-2-3 scenario, a politician is extremely reluctant to reduce 'giveaways' and increase 'takeaways,' with giveaways being defined as no tax increases accompanied by high and increasing entitlement payments, and takeaways being defined as increasing taxes and reducing entitlements. See #3 above as giveaways get votes, and takeaways lose votes.
So our duly elected officials, aka politicians, don't make a habit of telling the truth to We the People about just how bad things are with respect to our financial condition as a nation, except to remind us that their side of the aisle has all the good guys and the other side has all the bad guys.
So what's the truth concerning our nation's financial situation? And what lies ahead for our kids and grandkids?
Well, for an answer to those simple questions, since America's Hidden Credit Card Bill tells the sad but simple story in straightforward English, let's see what it has to say:
"HOUSEHOLDS can’t spend, on a continuing basis, more than they earn. Countries can’t either, at least not over the long run. But countries can certainly leave the bill for their current spending to the young and to future generations. Official borrowing is the old-fashioned way to do this . . . . But borrowing in broad daylight has a drawback:
The more you do it, the more lenders worry about repayment, and the more interest they charge for their loans.
So there’s a different way to borrow — one that’s more subtle, harder to see and, therefore, cheaper to do. You still take in money, pledge to return it, and leave future generations on the hook. But you call the money you take in “taxes,” not “borrowing.” And you promise repayment in the form of pension, health care and other benefits, but you don’t record the present value of those promises as official debt.
Social Security is a prime example. It takes in money, via payroll taxes, while promising hefty retirement benefits in return. Dig deep into the appendix of the most recent Social Security Trustees Report, released on Monday, and you’ll find that the program’s unfunded obligation is $24.9 trillion “through the infinite horizon” (or a mere $10.6 trillion, as calculated through 2088). That’s nearly twice the $12.6 trillion in public debt held by the United States government.
Social Security is backed by something perhaps even more powerful than the full faith and credit of the government: the political power of some 100 million Americans 50 and older....
Social Security’s hidden debt is just a small part of the story. Two weeks ago, the Congressional Budget Office released its annual long-term budget outlook. The good news: This year’s deficit — about 3 percent of gross domestic product — is the smallest since 2007 and way down from the peak of almost 10 percent in 2009. The bad: Without action, the deficit will grow “notably larger” starting in about four years, a result of our aging population, rising health costs and the new subsidies for health insurance.
Even worse, the budget office raised what’s called the alternative fiscal scenario, the most realistic projection of fiscal outcomes absent major policy changes. . . .The fiscal gap — the difference between our government’s projected financial obligations and the present value of all projected future tax and other receipts — is, effectively, our nation’s credit card bill. Eliminating it, would require an immediate, permanent 59 percent increase in federal tax revenue. An immediate, permanent 38 percent cut in federal spending would also suffice. The longer we wait, the worse the pain. If, for example, we do nothing for 20 years, the requisite federal tax increase would be 70 percent, or the requisite spending cut, 43 percent. . . .
What we confront is not just an economics problem. It’s a moral issue. Will we continue to hide most of the bills we are bequeathing our children? Or will we, at long last, systematically measure all the bills and set about reducing them?"
It's not a pretty picture. That's for sure.
But it's a realistic picture of where we're headed unless we start telling the truth and begin to address in earnest the enormous financial problems we are currently planning to hand off to future generations of Americans.
Unless we do get real and start telling each other the truth, and force our politicians to do likewise, our kids and grandkids are going to be the ones who get the humongous bill down the road.
And they will have every right and reason to "thank us" --- not today's or tomorrow's politicians, but us --- for sending it to them.
That's my take.