Scenario Will Only Get Worse in 21st Century
DALLAS (June 19, 2002) — What the government owes is ten times larger than official federal debt, according to a new study produced by the National Center for Policy Analysis (NCPA) based on research conducted at the Private Enterprise Research Center (PERC) at Texas A&M University. The reason is a huge unfunded liability in the Social Security and Medicare programs.
"Anyone who has at worked for at least ten years has already earned minimum Social Security benefits and full Medicare benefits, even though the person may not collect those benefits for many years," said Andrew Rettenmaier, one of the study's authors. "The problem is, no funds have been set aside to pay what has been promised." According to the study, implicit liabilities dwarf the official public debt.
- As of 2001, the cost of accumulated entitlement obligations owed is $12.9 trillion for Social Security and $16.9 trillion for Medicare.
- When combined with publicly held debt in 2001, the total burden equals $33.1 trillion, or more than 10 times the official debt measure-and 3 times the size of the nation's output.
The problem of unfunded entitlement liabilities is likely to get much worse during the 21st century:
- Between now and mid-century, the number of retirees in America will more than double, and the cost to maintain Social Security and Medicare will increase significantly.
- Currently, Social Security and Medicare draw 14.61 percent of taxable payroll; by 2050, both programs will require 28 percent.
"Paying Social Security and Medicare benefits in the future will put a tremendous strain on our children and grandchildren," Rettenmaier added.