Everyone’s hair is on fire, or so it would appear, about the current U.S. government shutdown and the looming debt ceiling deadline (next Thursday, Oct. 17).
To me, it’s like the captain and crew of the R.M.S. Titanic squabbling over how to swab up a puddle of water on the lido deck while all but ignoring that big, gaping hole just below the water line. It’s not just a recipe for failure, but one for epic disaster.
Currently, as we speak, the “debt ceiling” is $16.699 trillion. But do you know what that really means? I mean, a trillion dollars is a lot of money — more on that in a moment — let alone 16.394 trillion, but what does that really measure?
Well, the short, non-technical answer is that the debt discussed as part of the debt ceiling debate is the amount of securities, both marketable and unmarketable, that have been issued by the U.S. Treasury. The debt ceiling is the maximum amount of such securities that may be issued to cover government expenditures.
It does not, however, cover all of our national indebtedness. You see, we have these things called “unfunded liabilities.” Unfunded liabilities are the amount of money, at any given time, by which future payment obligations exceed the present value of funds available to pay them.
That, too, is money the U.S. government, as of this moment, either currently owes, or will owe, someone else.
As of this morning, the U.S. government’s unfunded liabilities total more than $126 trillion, or roughly seven and a half times the amount of money the folks in Washington are squabbling about right now.
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ADHD Moment: How much is a trillion dollars? Well, let’s start with the $100 bill (see sidebar for more). Few people carry these around on them anymore, but you can still get them fairly easily at your local bank for when you need to make large-scale cash purchases.
$100 bills come in stacks of 100, wrapped in a sleeve denoting it contains $10,000 (100 x 100 = 10,000). One hundred stacks of $100 bills — enough to fit in a large briefcase, and weighing 22 lbs. — constitutes $1 million.
At the mints where they are printed and in central reserve banks, $100 bills may be stored in large quantities on a pallet. A single pallet, which is stacked about 5 feet high, is worth $100 million. You could probably fit 20 pallets in a standard semi-trailer — that’s $2 billion.
With 500 of those, you’re at a trillion. But that’s even a bit much to try to visualize. So, think of $1 trillion this way: if you filled a football field with pallets of $100 bills, it would cover the football field of H.A. Lynn Stadium — including the end zones — two layers high.
A football field is roughly an acre. So, the $16.699 trillion of the current debt limit would cover nearly 34 acres, or a little less than a quarter-quarter-section in the country (for non-farming folks, a quarter-quarter-section is a quarter mile by a quarter mile in size) with $100 million pallets of $100 bills, five feet high.
So, what’s $126 trillion? That would be 252 acres, or an area five-eighths of a mile by five-eighths of a mile, covered in $100 million pallets of $100 bills, five feet high. If you converted those to dollar bills and placed them end-to-end (a dollar bill is 6.14 inches long), it would cover 12.21 billion miles.
A round trip to the “former” planet Pluto — when it is most distant from Earth — and back is only 9.34 billion miles.
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Sorry. I felt like we needed to visualize a little better what we’re talking about here.
I don’t want it to sound like I’m poo-poo-ing the debt ceiling, either. It’s seriously important, not so much because it would mean immediate disaster for everyone, but because of the message it would send to the rest of the world.
No longer would the phrase “full faith and credit of the United States of America” mean anything to the nations of the world. That’s not something you can easily fix.
But, the $126 trillion problem facing our nation today cannot be ignored, either. Maintaining the status quo will only make matters worse. And even the most “right-wing” solutions offered by congressional Republicans in the past four years won’t begin to even reverse course for at least 10 years.
Dealing with the $17 trillion issue in our nation’s general fund will barely put a dent in it, either. Particularly when you see the four biggest unfunded liabilities the U.S. faces:
• Medicare (Parts A & B): $80.34 trillion
• Medicare Part D (Prescription Drug Benefit): $20.19 trillion
• Social Security: $15.62 trillion
• National Healthcare (Medicaid and portions of Affordable Care Act): $9.30 trillion
We face a problem penny-pinching alone won’t fix. We’ve allowed our government to spend — or commit to spend — an amount of money even a drunken sailor would consider obscene.
Spending $100 million a day from Jan. 1, 1 A.D., until today, would only add up to $73.5 trillion. According to U.S. Treasury Secretary Jack Lew, some days, the U.S. government spends more than $60 billion a day.
I love libertarians to death, and I love how they astutely point out that the U.S. government’s fiat currency (a discussion for another day) is nothing more than imaginary money. But the fact is, whether the money is backed by gold, silver, or — as is currently the case, merely the “full faith and credit of the United States of America” — we’re all on the hook for this.
As it stands right now, every household in the U.S. now owes $1.1 million. Try thowing that on your maxed-out credit card.
Something foundational must change, or we’re in much bigger trouble than losing our national prestige. That discussion needs to happen now, because time is not on our side.
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If you’re reading this, thank a teacher. If you’re reading this in English, thank a soldier, sailor, airman or Marine.