It’s that time of year where we review the impact of government debt on individual tax payers. It is important to remember who is on the hook for government’s reckless spending binges.
Whenever we hear politicians make campaign promises, they sound like they are spending their money. But government doesn’t have any money, so the only way they can implement their expensive ideas, is to tax their citizens and companies, as that is their only source of revenue.
What is really troubling is that when the US government (and most others) planned their budget for the current fiscal year, they budget to spend more than they knew they will receive in tax revenue. In fact since 1970, the US has only balanced their budget four times. France has not had a balanced budget since 1974.
When governments overspend, they need to fund those deficits by issuing bonds. As the debt keeps rising, more and more of the budget goes to paying the interest on those bonds. Last year the US government spent over $250 billion on just the interest payments to service the Federal debt. They spent over $430 billion if we include the State and Local Government (SLG) securities.
Every election, candidates claim they will not add to the debt, yet except for four years in the past 45 years, every year the US government has significantly added to the debt. In Obama’s eight years in office, the US debt has exploded higher, by almost $10 trillion to $19.86 trillion.
The almost $20 trillion is the official debt figure, but there is also a massive amount of ‘unfunded liabilities’. Future obligations such as Social Security, Medicare, Veteran Affairs, and Federal employee benefits are not funded. The total of those ‘unfunded obligations’ totals over $100 trillion.
Here are the current numbers for the US debt:
1. Official US debt = $19.86 trillion
– debt per citizen = $61,133
– debt per taxpayer = $166,240
2. Total unfunded liabilities = $104 trillion
– liability per citizen = $320,749
– liability per taxpayer = $872,205
Add it all up and each taxpayer’s share of the national debt,and the ‘unfunded liabilities’ = $1,038,445. That’s is not a misprint. Each taxpayer’s share of the debt is over $1 million!
And every year that the government spends more that they have, adds to these totals. When the government spends, it is the taxpayer who must cover the costs.