Читать книгу Northern Light: Lessons for America from Canada's Fiscal Fix - Robert P. Murphy - Страница 35

One of the main difficulties in turning around the long-term fiscal condition of the United States government is the currently unsustainable structure of entitlement programs, in particular Social Security and Medicare. According to the Trustees Report released in April 2012,¹¹ if we disregard interest on the “Trust Fund” holdings and look just at incoming worker and employer contributions compared to outgoing benefit payments, then the Social Security program has been in cash flow deficit since 2010 (the first time this had happened since 1983), and this deficit is never expected to close for the entire 75-year forecast period going forward. Even if we include the interest earnings on the accumulated Trust Fund, Social Security will begin running annual deficits by 2020. At this time, annual incoming worker and employer contributions, plus interest earned on the Trust Fund, will fall short of outgoing benefit payments. Consequently the Social Security administrators will need to draw down the Trust Fund assets, which will be fully exhausted by 2033. Thus, depending on the treatment given to the Social Security “Trust Fund,” it is correct to say that Social Security as currently configured either broke down in 2010, will break down in 2020, or will break down in 2033.

Many analysts dispute the significance of the Social Security Trust Fund, which stood at $2.7 trillion as of January 1, 2012.¹² Indeed the Trust Fund consists of IOUs issued by the Treasury, when in previous years the government spent the surplus Social Security tax contributions on current expenditures. From an agency viewpoint, and perhaps when considering the solvency of the Social Security program in isolation, it may be useful to view Treasury securities as a genuine asset, in the same way that a corporation would.

However, when considering the financial obligations of the United States government, and the impact changing demographics will have on future taxpayers, the $2.7 trillion in the Social Security Trust Fund is simply money that Uncle Sam owes himself. Budget analysts implicitly admit this reality when computing the totals for “government debt held by the public,” because these figures exclude the bonds held by the Social Security Administration. In other words, if one wishes to lessen the crisis regarding the Social Security program by counting its $2.7 trillion in bond holdings, then to be consistent one must simultaneously acknowledge that the debt owed by the government to the public – in this case, future Social Security beneficiaries – suddenly becomes $2.7 trillion higher.

From a unified budgetary perspective (disregarding IOUs issued by the Treasury to other parts of the US government), the latest Trustees Report estimates that the Hospital Insurance (HI), Supplemental Medical Insurance (SMI), and Old Age, Survivors, and Disability Insurance (OASDI) programs – constituting what the public knows as Medicare and Social Security – over the next 75 years will have a massive shortfall in anticipated payroll contributions relative to expected beneficiary payments. The present discounted value of these combined shortfalls is a staggering $38.6 trillion. ¹³

What this figure means is that if the US government wanted to set aside a pile of money earning interest so that it could have a fund on which to draw whenever it had to pay out more in Social Security and Medicare claims than it collected in payroll contributions, then the government today would need a pile of $38.6 trillion, in order to satisfy current benefits scales for the next 75 years. Keep in mind that this figure assumes workers and employers would still have the standard amounts deducted from each paycheck over the next 75 years. The problem is that changing demographics will make the promised benefit payments rise so much faster, such that a fund of $38.6 trillion today, rolling over at the discount rate used in the projections, would be necessary to augment the shortfall each year and get through the 75-year forecast horizon. Note that the magnitude of these unfunded entitlement liabilities is more than double the total US GDP in 2011.

It should be noted that the unfunded entitlement obligations, though liabilities of the federal government in an accounting sense, are not counted in the official measures of gross government debt. In other words, the government’s $39 trillion debt that has currently accrued vis-à-vis Medicare and Social Security is in addition to the outstanding $10 trillion in Treasury securities held by the public. As time passes, and the Treasury must meet Medicare and Social Security cash flow shortfalls through the drawing down of Trust Fund holdings, the implicit entitlement debt will become explicit debt obligations owed to outside holders of Treasury securities. The point, however, is that current estimates of “the federal debt” typically focus only on outstanding Treasury securities, a practice that grossly understates the true fiscal crisis facing the US government.