Is anyone else worried about the $42 trillion question?

Federal Drive

Is anyone else worried about the $42 trillion question?

Over the next 75 years, nearly $28 trillion in unfunded obligations of the federal government are represented by Medicare and Medicaid. That's two-thirds.

Tom Temin@tteminWFED

March 8, 2016 5:06 am

2 min read

I don’t hear Bernie talking about it. Or Donald. Or any politician. They’ll all be dead in 75 years. So will you and I.

But consider this statement: “About $27.9 trillion, or 67.0 percent, of the reported total present value of future expenditures in excess of future revenue presented in the 2015 Statement of Social Insurance relates to Medicare programs reported in the Department of Health and Human Services’ 2015 Statement of Social Insurance.” That is, over the next 75 years, nearly $28 trillion in unfunded obligations of the federal government are represented by Medicare and Medicaid. That’s two-thirds of what we’ve promised ourselves that isn’t covered by any known revenue source.

I didn’t do any deep digging in musty archives to find this revelation. It’s right there on the first page of the summary of the Government Accountability Office’s latest critique of federal finances. GAO’s accounting staff decided to look at long-term projections along with the the last fiscal year’s statements. Exactly where is that $42 trillion going to come from?

It takes real effort to put all of the pieces of future federal finances together into a cogent picture. For instance, the Congressional Budget Office projects that just in the next 10 years, outlays for Medicare/Medicaid, Social Security, interest on the (growing) debt, and all other programs will rise by $2.5 trillion. Of that, only 17 percent is the “all other programs” category. A third of it is Medicare/Medicaid. Multiply the 10 years’ growth by seven or eight, and you get roughly to the order of magnitude of the figure cited by GAO.

GAO is saying that as long as unfunded outlays — deficits and their accumulation called the national debt — stay within accepted norms or ratios to gross national product or some such, then those programs can be considered “sustainable.” People proud of balanced budgets — like, say Bill Clinton — might ask, well, how can we pay for $2.5 trillion over 10 years, or $28 trillion or $42 trillion over 75 years?

You could tax the wealthy. But it probably won’t be enough. Forbes magazine said, in its most recent roundup, the 400 richest Americans have a combined wealth of $2.34 trillion. So you could confiscate every penny from Bill Gates, Charles Koch, George Soros and Mark Zuckerberg and the rest, and it wouldn’t make that much of a dent. Their combined wealth went up by $50 billion last year — not fast enough to keep up with the growth of spending.

GAO notes (page 161) that its projections presumes no change in public policy. Auditors state: “The projections in this report indicate that current policy is not sustainable.” They go on to explain why in great detail. But basically it’s the old story — revenue and expenditures aren’t going to match, ever.

Like the GAO, I’m not here to advocate any particular policy. Just to advocate for some policy. If a thing is unsustainable, it will go along until it can’t. Then what? I’d like to hear two sentences about that in one of the presidential debates.