Congratulations! You passed a big, round milestone last week.

You now owe the federal government more than $1 million.

[ad#Google Adsense 336×280-IA]You say you hadn’t heard that before? You doubt it could actually be true?

That may be because none of the men and women running for the nation’s highest office – with the possible exception of Gov. Chris Christie (who will soon be “suspending” his campaign) – has been willing to have an adult conversation with the American public.

These politicians consider us ignorant, deluded or both. And that’s how they like it.

This way they can win our votes by making even more promises they can’t possibly keep.

Some might say that’s just an opinion, and a cynical one at that. So let’s consider a few indisputable facts:

  1. This month, the U.S. national debt surpassed $19 trillion. That’s equal to $158,836 per taxpayer.
  2. The current unfunded liabilities for Social Security and Medicare now total more than $101 trillion. That’s equal to $844,300 per taxpayer.
  3. Add them together and – if you’re one of the poor schlubs who actually pays federal taxes – your share is more than $1 million. (Give me a high-five. You’re now a seven-figure debtor.)

This surprises a lot of people, even fairly well informed ones.

That’s partly because they’ve never considered the national debt in personal terms. And partly because they know the real burden will fall on future generations. (Although the consequences could arrive much sooner.)

Moreover, they have heard President Obama say that he has cut the federal deficit by two-thirds, from $1.4 trillion in 2009 to $439 billion last year.

This, while technically true, is the kind of stuff we spread around crops in the springtime.

When Mr. Obama took office in January 2009, the total national debt – everything piled up from George Washington to George W. Bush – was $10.6 trillion.

According to a new report issued by the nonpartisan Congressional Budget Office (CBO), when Obama leaves office the total debt will be nearly $20 trillion.

It takes chutzpah to nearly double the national debt on your watch and simultaneously pat yourself on the back for reducing the annual deficit by two-thirds.

But, like innocent children and apathetic teenagers, plenty of Americans are buying it. They want their federal benefits – and they don’t want to hear any nonsense to the contrary.

That’s why entitlements are considered the third rail of politics. Touch it and you’re dead.

But here’s the problem for those mature enough to sit still and listen.

Our national debt is now bigger than the economy. And the CBO estimates it will grow another $8.5 trillion by 2025. What’s more, the Social Security and Medicare shortfall – the one that totals more than $100 trillion – is growing by more than $8 trillion a year.

To put this figure in perspective, if the U.S. government confiscated all the profits of every publicly traded company in the nation and all the adjusted gross income of every household earning more than $66,000, it wouldn’t even pay for the annual increase in these unfunded liabilities.

There is no Social Security trust fund. There is no Medicare lock box.

One hundred percent of the payroll taxes for these programs are spent in the same year they are collected. If the federal government produced the kind of financial statements that are required of businesses and nonprofit enterprises, this would be more widely known.

But it doesn’t. And it isn’t.

Our entitlement system – which would make Bernie Madoff or Charles Ponzi proud – is careering toward bankruptcy.

Yet Republican front-runner Donald Trump promises – on the stump and in his books – not to reduce Social Security or Medicare benefits. Likewise, presumptive Democratic nominee Hillary Clinton insists that changing federal entitlements would be “just wrong.”

Senator Bernie Sanders promises to not only increase Social Security benefits but add college tuition to the long list of federal entitlements.

This is entirely fanciful. Although I’ll point out that the roaring crowds at Sanders’ events tend to be college students and other folks too young to know what socialism is or too stupid to understand what it does.

Entitlement spending is now so stupendous that it is no longer a matter of simply raising taxes here or cutting a program there. The whole system has to be radically reformed. Every serious person knows it.

Current beneficiaries will be protected, of course. Anything less would be political suicide. But the system must be made solvent for future generations.

Because the clock is ticking: This one.

Good investing,



Source: Investment U