- Add together the unfunded liabilities from Medicare and Social Security, and it comes to $99.2 trillion* over the infinite horizon.
- This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them. You are the ones who let them get away with burdening your children and grandchildren rather than yourselves with the bill for your entitlement programs.
But there are a few misleading things in Fisher's big bad numbers. They're not misleading because he's misleading us, but because he's a banker and uses jargon that is easy to misinterpret. For example, when he talks about an "infinite horizon," he's not saying we have forever to raise the money. He is talking about the "present discounted value," the amount of money in today's dollars that we would have to invest today in order to pay that bill as long as it lasts. If inflation doubles, that number doubles as well. You cannot "grow out of it" no matter what politicians say.
And when he uses decimal points, it implies an accuracy that simply does not exist. We don't know that it's 99.2 or 99.3 or 150 or 500. In fact if we use the history of government budgeting as a guide, then we are underestimating by an order of magnitude. All we know with certainty is that it's too big to be meaningful.
But the final thing is probably the most important, the assumption that there is such a thing as an infinite horizon. In math, yes. In econometric modeling, yes. In actuary, yes. In reality, not a chance. A nation that is staring at a present value debt 10 times the size of everything created in that nation does not have an infinite horizon. The best it can hope for is a beautiful sunset.
* Fisher does a little later math and concludes that the present value of just the unfunded portion of these entitlements comes out to $330,000 for every person in the country. If you divide it out by the number of people who actually have jobs actually making things that we could actually sell to raise the money, you will cry.
** While supporters of the war or the rebuilding or whatever it is now would call this losing in Iraq or turning it over to the terrorists, I would quote the wise philosopher Tom Petty: "It don't make no difference to me, everybody's had to fight to be free." If they cannot manage freedom on their own, then they cannot be free. Sorry.