The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.
Did you get that?
The entire economy is $15 trillion.
The accrued expense of Medicare and Social Security alone — and most of it is Medicare — is half the economy each and every year. Put that in your head and consider that this would mean that just to keep even we would have to more than triple the existing amount of tax collected, raising total taxation to more than 60% of the economy!
If you have read Leverage you know that one of the pieces that I pound on hard is the medical cost explosion. I’ve also written about it extensively here in these pages. This is why — it is simply impossible for the promises made through Medicare to be kept. That is not conjecture, it is not able to be fixed with taxation, it is not a matter of opinion.
It is mathematical fact.
You’re not going to get Medicare, unless (1) you’re getting it now and (2) you’re reasonably close to death. For everyone else what you have been promised and what you’re going to get are very different, and there is exactly nothing you can do about it.
There is also no “gradual” way to deal with it.