Well, David Walker has been warning us. From a fiscal point of view, we as a country are in serious trouble. Last night, someone on Fox News (wish I could remember who) stated that the United States of America may have passed a point of no return.
And now there is this… Richard W. Fisher (President and CEO of the Federal Reserve Bank of Dallas)… We face a national debt of $53 trillion to $58 trillion for social security/medicare/medicaid alone? Ha! Try $99 trillion. Here’s a couple of snippets:
The good news is this Social Security shortfall might be manageable. While the issues regarding Social Security reform are complex, it is at least possible to imagine how Congress might find, within a $14 trillion economy, ways to wrestle with a $13 trillion unfunded liability. The bad news is that Social Security is the lesser of our entitlement worries. It is but the tip of the unfunded liability iceberg. The much bigger concern is Medicare, a program established in 1965, the same prosperous year that Bill Martin cautioned his Columbia University audience to be wary of complacency and storms on the horizon.
Please sit tight while I walk you through the math of Medicare. As you may know, the program comes in three parts: Medicare Part A, which covers hospital stays; Medicare B, which covers doctor visits; and Medicare D, the drug benefit that went into effect just 29 months ago. The infinite-horizon present discounted value of the unfunded liability for Medicare A is $34.4 trillion. The unfunded liability of Medicare B is an additional $34 trillion. The shortfall for Medicare D adds another $17.2 trillion. The total? If you wanted to cover the unfunded liability of all three programs today, you would be stuck with an $85.6 trillion bill. That is more than six times as large as the bill for Social Security. It is more than six times the annual output of the entire U.S. economy.
Look… If you read nothing else this summer, read the transcript (here’s the link again) of Mr. Fisher’s speech.