Were a family to go out and borrow $455,000 on an adjustable interest rate to buy a big second home with no idea where they were going to get the money to pay it off, they would justifiably be seen as fools.
They certainly would not deserve a bailout from hardworking taxpayers who had been prudent stewards of their own earnings and savings.
Thanks to the compounded negligence of four successive generations of politicians in Washington, D.C., however, every family in America is now on the hook for $455,000 over and above what they owe on their own mortgage, or student loans, or credit cards or can expect to pay in taxes under the current tax system.
This is largely because of the middle-class welfare state initiated by President Franklin Roosevelt, expanded by President Lyndon Johnson, expanded again by President George W. Bush, and generally maintained and nurtured by all presidents and congresses in between.
Comptroller General David Walker, who heads the Government Accountability Office, testified on Jan. 29 before the Senate Budget Committee. His subject was the unfunded liabilities Uncle Sam has incurred on our behalf through already promised entitlements in programs such as Social Security, Medicare and the veterans benefits. These liabilities now exceed by $53 trillion the tax revenues projected to be available to pay for them.
"I know it is hard to make sense of what 'trillions' means," Walker said. "One way to think about it is this: Imagine we decided to put aside and invest today enough to cover these promises tomorrow. It would take approximately $455,000 per American household -- or $175,000 for every man, woman and child in the United States."
Of course, every man, woman and child does not work for pay outside the home. Some are too young. Some take care of their own children. Some are criminals who have actually been locked up in jail. Some are ill or incapacitated. And some are just lazy.
When you divide the unfunded costs of promised entitlement benefits by the number of Americans who work full time, says Walker, it equals $410,000 per worker.
A married couple making $80,000 per year would have to set aside all their income for more than five years to cover their share. They cannot do that, of course, because they are already paying a significant part of their annual earnings in federal income taxes, Social Security and Medicare taxes, state income taxes, property taxes, sales taxes and excise taxes. Also, they need what is left over after all these taxes to pay their living expenses.