The U.S. federal government is facing a staggering financial burden, as revealed by a U.S. Treasury report. According to the report, the government has accumulated $142 trillion in debts, liabilities, and unfunded obligations. This figure is equivalent to 93 percent of the total wealth accumulated by Americans since the founding of the nation, estimated to be $152 trillion. The report provides a complete picture of the government’s financial situation, unlike other measures such as the national debt and federal budget, which are incomplete and overlook crucial factors.
The Treasury report utilizes accrual accounting, a method that measures financial commitments as they are made. This is in contrast to cash accounting, which only considers money as it flows in or out. Accrual accounting provides a more accurate assessment of the government’s financial health, as it takes into account long-term obligations such as pension benefits for federal workers and healthcare costs. By ignoring these obligations, the commonly cited national debt and federal budget provide an incomplete picture of the government’s fiscal situation.
The grand total of the government’s debts, liabilities, and unfunded obligations is $142 trillion. This massive figure can be difficult to comprehend, but it becomes more significant when placed in context. It represents 93 percent of the net wealth accumulated by Americans over the nation’s history. It also translates to a burden of $430,252 for every person living in the United States, $1,098,087 for every household, 2 times the annual U.S. economic output (GDP), and 30 times the annual federal revenues.
One major component of the government’s financial burden is the publicly held debt, which amounts to $26.3 trillion. This is the money owed to non-federal entities. However, this figure excludes $6.9 trillion, which the government owes to federal programs like Social Security and Medicare.
Pension and other retirement benefits for government employees are also a significant liability for the federal government. The report reveals that the government owes $14.3 trillion in pensions and benefits to federal employees and veterans. This means that every household in the United States is responsible for an average of $109,005 to pay for these benefits.
Social insurance programs like Social Security and Medicare further contribute to the government’s financial burden. Contrary to popular belief, these programs don’t save workers’ taxes for their retirements but immediately spend the majority of those taxes to pay benefits to current recipients. The unfunded obligations of Social Security and Medicare amount to $49.8 trillion and $53.9 trillion, respectively. These shortfalls reflect the financial burden being passed on to future generations.
The Treasury report also takes into account the federal government’s commercial assets, which amount to $5.4 trillion. However, this value doesn’t include assets like national parks and historical artifacts, which are intended to be preserved as national treasures.
The root causes of the government’s debt are often misunderstood by the public. A survey commissioned by Just Facts found that many voters believe military spending or tax cuts are the main drivers of the rising national debt. However, the primary driver is increased spending, particularly on social programs. These programs have grown significantly from 21 percent of all federal spending in 1960 to 64 percent in 2022. Social Security and Medicare account for a significant portion of the government’s unfunded obligations.
Excessive government debt can have detrimental effects on the economy, including lower wages, increased inflation, weak economic growth, higher taxes, and reduced government benefits. The costs of federal borrowing will ultimately be borne by future generations, potentially diminishing their living standards.
In conclusion, the U.S. federal government is facing a massive financial burden of $142 trillion in debts, liabilities, and unfunded obligations. This burden is leaving future generations with a significant financial struggle. It is crucial to understand the root causes of this debt and the potential consequences it may have on the economy and future generations.
