Our nation’s fiscal challenge is much worse and growing at a much faster rate than politicians are willing to admit.
The National Debt Clock debuted in 1989 displaying total national debt of $2.7 trillion. As of July 25, 2012, the National Debt Clock shows total national debt of over $15.9 trillion and increasing rapidly. However, this clock significantly understates the severity of our federal financial challenge because it only represents the total current amount of U.S. public and intra-governmental debt.
The magnitude of the financial challenge facing the U.S. is better represented by the federal government’s total liabilities (e.g., publicly held debt, unfunded military/civilian pensions and retiree health obligations, environmental liabilities), unfunded social insurance promises (e.g., Social Security and Medicare), and a range of other federal commitments and contingencies (e.g., Federal National Mortgage Association, Pension Benefit Guaranty Corporation). These figures are the basis for CAI’s new Burden Barometer, which provides a much better measure of the enormity of our federal financial challenge.
The U.S. Financial Burden Barometer (Burden Barometer) offers a more comprehensive basis to assess where the U.S. is and where it is headed financially. It was created by adding the numbers for total liabilities, unfunded social insurance promises, and various commitments and contingencies found in the official financial statements of the U.S. government and other official government reports (e.g., annual Social Security and Medicare Trustees Report, Congressional Budget Office’s (CBO) current projected deficit for fiscal 2012). Importantly, the Burden Barometer has an extra digit that can be used, if necessary. Hopefully this will never happen, but the National Debt Clock had to be modified to add an unanticipated additional digit within the past 5 years. As of July 25, 2012, the Burden Barometer stood at $69,776,800,000,000, and the number is growing by about $10 million a minute.
The Burden Barometer should give politicians a new sense of urgency to act. It also provides a new way to keep score and hold politicians accountable. By using the Burden Barometer, politicians can also be recognized and rewarded for supporting reforms that can have a major impact over time, not just in the next 10 years.
For example, reforms to existing social insurance programs are likely to be phased-in over time. These reforms would not reduce the national debt one dollar, but they could result in a significant reduction of the amount shown and rate of increase of the Burden Barometer. It’s a new way to measure our much bigger financial challenge and to give credit for meaningful reforms that can have a huge impact over time.
The Burden Barometer is the warning sign that will bring attention to our nation’s fiscal challenge. According to Thomas Jefferson, democracy depends on an informed populace. The $10 Million a Minute Bus Tour is helping to inform and engage the public, but it is time for public officials to accept responsibility and start implementing solutions. Time is running out and the longer we wait to address our fiscal challenge, the bigger it will become. Action needs to be taken as soon as possible, but no later than 2013.