Two days before the U.S. House of Representatives is set to vote on a Balanced Budget Amendment to the Constitution, and one week before the “supercommittee” is supposed to propose a bill to reduce future deficits by at least $1.2 trillion, the national debt passed the $15 trillion mark.
In addition to the over $15 trillion in current debt, the federal government has over $116 trillion in unfunded liabilities, according to USDebtClock.org. Unfunded liabilities are obligations that the federal government has committed to paying, but will not have the revenue to pay for. They are Social Security, Medicare and the Medicare prescription drug benefit, which are funded through payroll taxes.
The U.S. has over 312,000,000 people and over 112,000,000 taxpayers. This means the total debt per taxpayer is over $133,000 and total liability per taxpayer is over $1 million.
In the 2011 fiscal year, total government revenues were about $2.3 trillion and total government spending was about $3.6 trillion, thus adding $1.3 trillion to the national debt. The interest paid on the debt in 2011 was about $266 billion, according to the Congressional Budget Office.
Under current policy, interest payments, Social Security, Medicare and Medicaid will consume 100 percent of government revenue in 2025, the National Commission on Fiscal Responsibility and Reform estimates.
To get a feel for these numbers, it helps to chop off eight of the zeros and imagine the equivalent for a family budget. Let us call this family the Jones.
The Jones make $23,000 per year. In 2011, they spent $36,000 and added $13,000 to their overall debt burden. The family has a total debt burden of $150,000 and spent $2,660, or 12 percent of their income, on interest on their debt in 2011.
The Jones expect their income to rise, but they plan to increase spending at an even faster rate and have committed to add an additional $1,160,000 to their debt in the future. In 2020, they will pay about $8,000 in interest on their debt. By 2025, the Jones' income will only be able to finance interest on their debt, health care, and taking care of Grandma and Grandpa Jones.
Congress has, this year, been trying to prevent the looming fiscal crisis.
The U.S. House of Representatives is debating, on Thursday afternoon, adding an amendment to the U.S. Constitution that would require the federal government to balance its budget each year. The vote will be held on Friday morning. There is no word yet on when the Senate will take up the measure.
The Joint Select Committee on Deficit Reduction, or “supercommittee,” faces a deadline of next Wednesday to come up with at least $1.2 trillion in deficit reduction. If they fail to reach an agreement, $1.2 trillion in automatic spending cuts will go into effect, mostly in military spending.
The supercommittee is split evenly along party lines with six Republicans and six Democrats. Republicans on the committee want to achieve deficit reduction mostly through spending cuts while Democrats prefer more tax increases. The impasse has many lawmakers worrying that they will fail to reach an agreement.
In a break with Republican orthodoxy, supercommittee member Pat Toomey (R-Pa.) offered a proposal last week, endorsed by co-chair Jeb Hensarling (R-Texas), that would raise $250 billion in revenue. Democrats rejected the proposal because it also made the Bush-era tax cuts permanent. Democrats also do not want to reduce the rate of growth in Social Security payments or raise the age of eligibility for Medicare.
Patty Murray (Wash.), the Democratic co-chair on the committee, offered a counter-proposal this week that would raise $401 billion in revenue, down from Democrats' previous demand of $1 trillion in revenue. While Toomey has the support of the other Republicans on the committee, Murray does not appear to have the support of all the Democrats on the committee for her proposal.
While the supercommittee is struggling to come up with $1.2 trillion in deficit reduction, Reps. Mike Simpson (R-Idaho) and Heath Shuler (D-N.C.) are leading a group of over 100 lawmakers asking the supercommittee to “go big.” They argue that $4 trillion in deficit reduction is required to get the nation's finances in order.
For it to be successful, the supercommittee needs to come up with a proposal this weekend so it can be sent to the Congressional Budget Office on Monday and be scored ahead of the day before Thanksgiving deadline.
Correction: Thursday, November 17, 2011:
An article on Thursday, November, 17, 2011, about the national debt incorrectly stated that Rep. Jeb Hensarling (R-Texas) offered a debt reduction proposal with revenue increases. It was Sen. Pat Toomey (R-Pa.) that made such a debt reduction proposal.