Medicare? Social Security?…Fuggedaboutit
Means-Testing Your Social Security Payments
by Gary North
I posted an article on my Tea Party Economist site on the increase in the real debt of the U.S. government over the last year. The increase was $11 trillion. Read it here.
Impossible? Not at all. The annual increase – the deficit – will be even larger next year, and larger still the year after.
This refers to the unfunded liabilities of the government. These are the price tags of political promises which politicians have made over the years for which there is no money available to fulfill. The expert here is Prof. Lawrence Kotlikoff of Boston University. His most recent report says that total unfunded liabilities went from $211 trillion a year ago to $222 trillion this year.
The biggest source of future red ink will be Medicare. In second place is Social Security.
How can the government pay off these obligations? It can’t. The possibility does not exist. The government needs a spare $222 trillion to invest in private companies. This investment must make a return of at least 5% to provide the money needed to pay meet the government’s obligations. There is no $222 trillion available, and no capital markets large enough to absorb $222 trillion.
Conclusion: the U.S. government will default.