According to a Wall Street Journal article last week, the national debt is not $16 trillion but is closer to $87 trillion because of unaccounted for government liabilities.
Bill Archer and Chris Cox, two former member of the House of Representatives and members of President Clinton’s 1994 Bipartisan Commission on Entitlement and Tax Reform, say that adding only Social Security, Medicare and federal employees’ future retirement benefits to the official US debt puts it at $ 86.8 trillion.
Further, Archer and Cox see an annual $8 trillion hole in the federal budget and calculate that if fedgov confiscated the income of all Americans having adjusted gross incomes of $66,193 per year and all the taxable corporate income, that confiscation would fall $1.3 trillion short of filling the $8 trillion hole.
There is no politically acceptable solution to the debt overhanging the federal government. Taxes cannot be raised enough to fill the gap; and there will not be a combination of tax increases and spending cuts to balance the budget. Projecting a balanced federal budget in ten years is fantasy.
It is a myth that “We can grow our way out of this deficit.” Too many government obstacles and unknowns disincentize starting new businesses and expanding existing businesses. The full impact of Obamacare is not known. How much taxes local governments need to fill their fiscal gaps is not known. In short, too many unknowns. Starting new business ventures is risky enough but even more uncertain in a climate where predatory governments are actually encouraged. (Warren Buffett, are you listening?)
Historically, government debt has never been repaid in the value of the money borrowed but has either been defaulted on or paid back in greatly debased money. There is no reason for the US to default or repudiate, which means that fedgov (working in collusion with the Fed) will continue to create dollars. The dollar will be printed until it is worth but a fraction of what it is today or until it is worthless.
One example of how unaccounted for debt accrues to fedgov. In the financial world, it is accepted that the federal government backs Fannie Mae and Freddie Mac debt. Years ago, one of our secretaries of the Treasury—I’m fairly certain that it was Paul O’Neill early in George W. Bush’s first term—openly stated that there was no US Treasury guarantee for Fannie Mae and Freddie Mac debt. Now, it is accepted that Fannie Mae and Freddie Mac debt is a federal government liability.