GAO reports on U.S. government's finances

A couple of years ago I heard David Walker, U.S. Comptroller General, speak in Portland about the state of the U.S. government's finances. I just ran across the GAO's latest assessment which contains a preface from Walker. He states:

The federal government faces large and growing structural deficits in the future due primarily to known demographic trends and rising health care costs. These structural deficits—which are virtually certain given the design of our current programs and policies—will mean escalating and ultimately unsustainable federal deficits and debt levels. Based on various measures—and using reasonable assumptions—the federal government’s current fiscal policy is unsustainable. Continuing on this imprudent and unsustainable path will gradually erode, if not suddenly damage, our economy, our standard of living, and ultimately our domestic tranquility and national security.

Read the report here and, in particular, check out table 4 on page 10 of the report (which happens to be page 16 of the PDF file). Some highlights:

• In 2000, the U.S. government had roughly $20 trillion in future expenditures on the books. In 2006, the figure had risen to almost $51 trillion. That includes payments on our debt (which has greatly risen during that period), future Social Security and Medicare payments, etc. (Note that for the purposes of this example, "the future" means the next 75 years.)
• That works out to be $190,000 per U.S. household in 2000... and $440,000 in 2006, an increase of 134%.
• During the same period, the median household income rose only 10%, from $41,990 in 2000 to $46,326 in 2006.

In short, the debt burden ratio that each U.S. household carries for the government's future obligations--and which will pay for with our taxes--has more than doubled in this six year period.

Imagine this: to pay for the government's current commitments for the next 75 years, you'd have to fork over almost ten years of your household income. And if I've read the document correctly, that's just to cover things the government has already promised to pay (i.e. debt payments and entitlement programs like Medicare). You'd still be on the hook for everything else the government pays for.

Ten years out of 75, maybe that doesn't sound like such a hugely bad deal. It's roughly 13% of household income. But keep in mind that six years ago when Bush came to Washington, you were only on the hook for 6%.