America’s Real Budget Deficit: $4.2 Trillion

At the Washington Post, Brian Lawrence notes a Government Accountability Office report tallying up not just government spending, but spending the government has obligated itself to. Promised spending, to put it another way.

The GAO report was released on the Friday before the Christmas holiday, always a good day for the government to release bad news, and certainly this report was some ugly news. It shows that the nation’s budget deficit is much larger than taxpayers are being led to believe.

“Net present value” means the total that would have to be set aside today to pay the costs of these programs [Medicare and Social Security] in the future. The government puts these numbers in appendices, rather than in headlines. But the costs are real.

In fiscal 2011, the cost of the promises grew from $30.9 trillion to $33.8 trillion. To put that in context, consider that the total value of companies traded on U.S. stock markets is $13.1 trillion, based on the Wilshire 5000 index, and the value of the equity in U.S. taxpayers’ homes, according to Freddie Mac, is $6.2 trillion. Said another way, there is not enough wealth in America to meet those promises.

If the government followed corporate accounting rules, that $2.9 trillion increase would be added to the $1.3 trillion cash deficit for fiscal 2011 that has been widely reported. And a $4.2 trillion deficit is something that Americans need to know about.

Indeed they do, but unfortunately the government would rather obscure this fact from the taxpayers. But there’s no denying that this deficit is real.

Unless some want to argue that Social Security and Medicare aren’t real obligations under current law (and I’d like to hear our friends on the left make that argument), then we must accept that the obligations – the promises – they represent are actual burdens to the taxpayers.

Burdens no tax hike can solve. We need less spending. We need less government, in general.

Rob Port is the editor of In 2011 he was a finalist for the Watch Dog of the Year from the Sam Adams Alliance and winner of the Americans For Prosperity Award for Online Excellence. In 2013 the Washington Post named SAB one of the nation's top state-based political blogs, and named Rob one of the state's best political reporters.

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  • igx

    Liberals think GDP grows on trees. Then throw in the fact that it’s a flawed measure of economic output. Promises that depend on high dependable national output at a time that global demographics make that unlikely. 

    • ellinas1

      Conservatives think GDP grows out of thin air. Then throw in the fact that it’s a
      flawed measure of economic output. Promises that depend on high
      dependable national output at a time that global demographics make that

      • Hal826

        Fiscal conservatives realize that increasing debt will eventually lead to a massive collapse.  When this government goes down, the housing crash (which we are still in) and credit crunch will look very tame.  Imagine all the people planning on Social Security, based on the report sent to them each year, when there is no way to pay those promised benefits.  There will be terrible anarchy that will make even Jamer Morrow wish for a return to Capitalism.

        • ellinas1

           What we are witnessing in Europe is that there is a severe economic contraction due to decreased government spending and severe cuts.
          I am not an advocate of budget deficits and I do not like nationals debts (passing the buck to future generations. I do believe in proper taxation in order to pay today, what “we the government/taxpayers” spend today.
          If we don’t have the money for a project, we should only have three choices:
          a) We don’t do it.
          b) We save for it,and do it when we have the money.
          c) Raise additional revenue (taxes) and pay as you go until the project is completed. Then this “special tax” expires.

          For your social security example, since people want it, we have to tax the people appropriately, mandate that every body pays, no income limits or exemptions, and means tested payout. Only the truly needy get a check. Most importantly, Soc. Sec. funds should be separate from the National budget, politicians should not borrow from the fund to pay for anything. Should be off limits.

  • mickey_moussaoui

    We need to come up with $14.5 trillion dollars just to break even.

  • Beekerbeck

    This Nation has a huge nation debt, and it is ever increasing. We hear how terrible this is, yet are anyone serious about doing anything. Will anyone fight to cut half of the federal budget? Will any one cut the Department of Labor, Education, Energy, Health, EPA, Pentagon, Homeland Security, and all foreign and local aid? I think not.

  • sbark

    We crossed the line with Obama’s Stimulus / Porkulus…………at that point each new dollar of Govt debt results in a NEGATIVE GDP effect……….

    The SHTF when people realize that either politicians cannot do anything, or wont do anything and realize its irreversible

    Stansbury says UniBank of Italy, a giant bank, its demise is immenent, which will have a wave effect thru Europe and into the USA due to money market funds invested in Europe from USA…….be able to bend enough to put your head between your knees and pucker up.

  • DonnyB

    Promises that can’t possibly be kept, won’t be kept.  Our kids are watching us run up these deficits on their dime, they will repudiate the promises when we present them with the bill, perhaps sooner. 

    What is going on in Europe now is a negotiation, the various parties are battling over how to apportion losses from money that has already been wasted.  The same “negotiation” will take place here.  Generally in these negotiations, people with non-legally binding claims – promises – never fair too well.  SSN and Medicare will be gutted for anybody under 45.  It’s just math.

    • mickey_moussaoui

      And as we know, liberals fail in math.

  • awfulorv

    Not to worry people, I saw an ad this morning regarding a new  Swiss Debt Reduction company which will begin operation, on a world wide scale, after the New Year.