It is much worse that you think!

 

Government obligations for Social Security and Medicare may soon exceed the combined net worth of every household and nonprofit organization in the country.

The figures exist, but they are ignored. News reports regularly inform us of the growing federal deficit, projected at a stunning $1.75 trillion for fiscal 2009 and $1.17 trillion for 2010. But regularly reported less visible government obligations have been growing much faster.
 
In the nearly five years from January 2003 to December 2007, the Medicare trustees reported that the unfunded liabilities of Social Security and Medicare grew by a stunning $10.4 trillion. The average annual growth topped $2 trillion. That exceeds the expected formal deficit of $1.75 trillion this year.
 
In the 2008 trustees report the unfunded liabilities of Social Security and Medicare -- promises of future retirement and health care benefits -- total $42.9 trillion.
 
Ironically, payroll tax payments are still large enough that the Social Security and Medicare programs don't need every dime. The extra money goes into the program trust funds as Treasury debt. The actual cash is spent elsewhere. Basically, the employment tax has been subsidizing other federal spending. This has been going on since the 1983 "reform" of Social Security.
 
Today's Deficits. That's Nothing!
 
Last year's Social Security trustee report estimates that Social Security will have more revenue than expenses until 2015. If higher cost assumptions prevail, however, the last year of positive flow will be 2010.
 
That's next year.
 
I am not making this up. It is public record. You can see for yourself by examining table VI.F9 on page 191 of the 2008 trustees' report.
 
When Social Security and Medicare costs exceed their revenues, the Treasury will have to borrow money to cover the shortfalls. When that happens, today's stunning deficits will look small. That's why our future contains inflation.
 
There is another way to see how serious our situation is: Compare the unfunded liabilities of Social Security and Medicare with the net worth of every household in America.
 
According to the Federal Reserve flow-of-funds figures for year-end 2007, our collective net worth as consumers was $62.7 trillion. By the end of 2008, the same figure had fallen to $51.5 trillion. Another year of growth for Social Security and Medicare liabilities would bring total unfunded government promises to about $46 trillion. That's nearly 90% of our net worth.
 
If consumer net worth fell an additional $5 trillion -- the same amount it fell in the last three months of 2008 -- we'd be broke.
 
Yes, you read that right.
 
Government obligations for basic programs would exceed the net worth of every household and nonprofit organization in America.
 
We'd be the financially upside-down nation.

Best Regards,