The Tab

The latest estimate of unfunded federal liabilities is $62 trillion over the next 20 years.  According to USA Today, that’s $534,000 per household (I’m not sure how they are defining household).

My math puts that at $200,000 per person over the next 20 years, or $10,000 per person per year over the next 20 years.  That’s not per tax payer, by the way.  That’s per person.  Have a family of three?  You’re on the hook for $600,000.

But it gets better.  That $62 trillion is “unfunded” and not part of the “normal” budget.  So that’s $10,000 per person per year on top of the federal-state-local income, payroll, excise, capital gains, sales, property (and more) taxes you are already paying.

Paul Ryan’s plan is looking better every day.

2 Responses

  1. Don’t forget about the time value of money. It’s not clear from the article how they are handling inflation, and whether that is $62 trillion in present day dollars or $62 trillion in 2031 dollars. Assuming for the sake of argument that it is 2031 dollars, than that would put our annual contribution over the next 20 years at about $7,500 per person. (Gotta love compounding interest.)

    If we assume that the inflation rate will continue to go up (which is what “Quantitative Easing” is, by the way…and attempt to deliberately increase inflation), then the numbers get even better. At 10% inflation, the annual contribution becomes about $3,500. Merely horrible and oppressive, in other words, rather than catastrophic. I think that is the logic of the Fed…a slow erosion of value rather instead of a sudden crash.

    On the one hand, inflation is probably the fairest tax of all; it impacts all value equally. On the other hand, high inflation acts like a boat anchor on the economy. In the above scenario, you suddenly have to make a 10% return on your investment just to break even. There aren’t that many investment opportunities (new businesses) that generate that kind of return. Add that to uncertain tax policy and entrepreneurs are going to sit this one out. No new jobs, no economic growth…sound familiar?

    Paul Ryan’s plan, or one like it, is the only thing that can save the nation’s economy.

  2. Good points. My assumption was the $62T was current dollars since the article didn’t specify.

    So, here’s a question. Without structural reform, do we end up as no-growth, no-jobs France or collapsing Greece (setting aside the problem that there isn’t enough money to bail us out like Greece)?

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