The gap between the money Washington takes into its coffers to pay its IOUs and what it actually owes on those IOUs is taking on Grand-Canyonesque proportions, with unfunded liabilities hovering around $62 trillion, according to a USA Today analysis.
Yes, trillions, and trillions. And that breaks down to a staggering $534,000 per U.S. household, USA Today's analysis finds. By the end of September, another $5,240 that has accumulated will push the
household share to nearly $540,000.
Last year, the government raised $1.5 trillion in new debt to cover budget deficits. Also last year, the government added $5.3 trillion to the amount it owes in new financial obligations.
Repeat such patterns year after year, and it's no wonder how these liabilities mount up. Most of those obligations are the result of programs such as Medicare and Social Security.
Add to the problem, more and more people are going to retire over the coming years and will expect the Medicare and Social Security services to which they feel entitled.
Furthermore, people are living longer, and medical costs are going up, which complicates the situation even more.
And on top of that, there are other public-sector IOUs out there that need to be considered along side of Social Security and Medicare, such as veteran and federal employee benefits.
In short, it's very hard to gauge the enormities of America's debts.
"The [federal] debt only tells us what the government owes to the public. It doesn't take into account what's owed to seniors, veterans and retired employees," says accountant Sheila Weinberg, founder of the Institute for Truth in Accounting, a Chicago-based group that advocates better financial reporting, says, "Without accurate accounting, we can't make good decisions," the newspaper reports
Last year, Medicare alone took on $1.8 trillion in new liabilities, while Social Security racked up $1.4 trillion in fresh obligations.
As a whole, Medicare's total unfunded liabilities are estimated to be around $25 trillion, while Social Security's should add up to $21.4 trillion.
That number comes from taking everyone in the system now, and then calculating the difference between the taxes they should pay and the cost of benefits they should receive.
In other words, Social Security liabilities outweigh tax money destined to Social Security services by $21.4 trillion.
Lawmakers often throw around much lower numbers, for example, pointing to Social Security's $6.5 trillion shortfall over a 75-year period.
That number is lower because it factors in future tax revenues from people not in the system yet, USA Today points out.
Whatever the methodology may be, Democrats and Republicans agree on the need to act now.
To help fix the problem, President Barack Obama wants to raise taxes on wealthier Americans and cut spending, while Republicans are less keen on tax hikes and rally behind deeper spending cuts.
But they have to agree on how much they can borrow in the meantime.
The country is up against its $14.3 trillion debt ceiling and to avoid default, the more likely scenario involves lifting the borrowing limit, which Congress must approve.
Republicans have said they will not approve the increase without attaching deep spending cuts in return.
The U.S. Treasury says the country will default unless a deal is reached by Aug. 2.
Negotiations between both sides are under way, and administration officials say they are confident they'll reach a deal.
The debate makes foreign investors in the U.S. debt - Asian governments especially - very nervous although analysts are confident Washington will work out the debt ceiling issue.
"We think that the U.S. will pass the vote to increase the budget ceiling so we don't think it will have structural implications for Asia," says Dariusz Kowalczyk, senior economist at Credit Agricole CIB, according to The Associated Press.
"But obviously the nervousness that surrounds the vote and the heated political debate make it exceedingly clear to Asian central banks that Treasuries are not such a safe avenue to investors countries as they use to think."
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