Here’s an unsettling fact: No one in the United States is debt free. Currently, every single man, woman and child in the nation owes $56,715, and that number is increasing daily. How is that possible?
Well, it’s simple: The federal government spends more money annually than it takes in through tax revenue. The difference between money spent and money taken in for the year is the deficit. Currently, the U.S. government brings in about $3 trillion in tax revenue every year. Federal yearly expenditures, however, total about $3.5 trillion, which leaves a deficit of about $400 billion dollars. Programs such as Social Security, Medicare and federal pensions all contribute to the yearly total expenditures. These programs are expensive, and they create a deficit that adds to the total debt, which has grown exponentially in recent years.
According to data taken from the U.S. Treasury, the national public debt currently stands at over $18 trillion. When divided amongst the 300 million American citizens, that debt total comes out to $56,715 per individual.
$18 Trillion is Just the Beginning
If you think that number is crazy, keep in mind that unfunded liabilities such as future federal employee benefits and promised Social Security spending isn’t even included in that number; current U.S. unfunded liabilities are at a whopping $95 trillion dollars. That means that every U.S. citizen owes $812,074 in funded liabilities, and just like the public debt, that number is constantly growing.
Total U.S. assets per citizen when divided amongst the population comes out to just over $300,000, which is not even enough money to pay for half of the current unfunded liabilities. Just when you thought it couldn’t get any worse, not everyone will share this debt equally. Technically, every citizen owes $56,715, but not every citizen pays taxes.
If you divide the current national debt amongst the total U.S. tax payers, you will find that each taxpayer owes $154,142. For a lot of people, that’s the cost of a home or a college education for multiple children.
What Can Be Done?
Clearly, the American people cannot pay off the debt. Unfunded liabilities exceed total assets almost threefold. How, then, will we ever manage to pay off the debt? The options for eliminating the national debt are slim. Younger generations will be forced to make great sacrifices in order to pay for the current excesses of federal spending. The youth of America will inherit the massive debt, and it will be up to them to find a solution to the crisis.
The debt cannot be paid off as it stands. At some point, the United States is going to have to default on its debts. This can get pretty messy since it is going to greatly anger foreign creditors such as China. If the U.S. does not default on its debt, the problem will continue to grow, and the Federal Reserve will continue to devalue the dollar in order to keep the current, unsustainable system running. This inflation of the currency by the Federal Reserve will lead to even more severe problems, but you’ve heard enough bad news for the day.
Public Debt and the Future
The public debt is an issue that directly affects future generations. Young entrepreneurs will be faced with the challenge of succeeding in an economy bogged down by debt and propped up by runaway inflation. It is of the utmost importance that young U.S. citizens educate themselves on the current economic crisis so that they may be prepared to do what past generations could not: free themselves from debt.
For a real time update on the current debt and to see how much you owe check out the Debt Clock.