It's time We the People stopped lamenting or ignoring, as the case may be, and instead started doing something about the terrible financial situation we are in the process of handing off to future generations. It's getting completely out of hand.
While getting our heads around the fact that the U.S. government is now in debt more than $100 trillion is hard enough, and more than understandable to most of us, how does $300 trillion sound?
You see, the $100 trillion doesn't include committed but unfunded promises and liabilities such as Social Security, Medicare, Medicaid, ObamaCare, government guarantees for such things as student and home loans, and many other 'off the books' and uncounted but all-too-real future financial obligations. And all that excludes the state and city obligations such as public pension and health care underfunding, as examples.
That's bad enough, but here's another factoid which really gets my attention. For someone born today who will be 72 years old in 2087, the U.S. economy will probably be half as big as presently estimated by the government gurus. In simple terms, for an economy growing at a future rate of 2% annually instead of its historical 3% rate, the rule of 72 reveals that it will be 50% smaller than it would have been had it grown at its historical rate. See Hillary Got It Right About Growth which is subtitled 'Democrats talk about fairness but forget that a robust economy would make it easier to achieve.' That means 50% less for the government to tap and for individuals to enjoy.
And that also makes the current huge 'underfunding' problem a nearly insurmountable 'slow growth' related one. More economic growth means a bigger tax base from which government obligations can be satisfied whereas less economic growth means an already unfunded liability becomes an impossible one for future taxpayers, aka our grandkids, to satisfy.
In simple terms, our ~$300 trillion in current liabilities would be difficult but perhaps not impossible to fund in a 3% growth economy. But at 2% growth for the long haul, if we continue to accept and forgeddaboutit for now --- our kids and grandkids won't have that luxury of selective amnesia.
And the primary reasons for the not unlikely slowdown in economic growth in the future from 3% to 2% annually are actually quite simple --- (1) the growing piece of nonproductive government in relation to the much more productive private sector, (2) a demographically older population which employs fewer workers relative to the total population, and (3) our state of current indebtedness as a nation.
You see, recurring productivity gains (more output per worker) and a growing workforce (more people working) are essential factors underlying solid economic growth. Productivity is a critical component of survival and growth in the private sector. In the public sector, however, it isn't even calculated, let along improved. The output for input factor is missing from the cost benefit equation of public sector accounting.
So it's a 2-fer dilemma of epic size that we're facing. The more government commits to do on our behalf, the more our financial obligations grow, the fewer productivity gains our society experiences and the slower our country's future economic growth becomes.
And it's economic growth that pays the bills --- not the growth of government's promises.
We the People have some serious soul searching to do and shouldn't look to our elected officials to help us do it --- because they won't.
What will our grandkids say about us? I worry about that.
That's my take. And it's a non-partisan one.