According to the most recent Medicare Trustees’ annual report, in April, [Chris] Cox and [Bill] Archer write, “the [current] value of the unfunded liability of Medicare was $42.8 trillion. The comparable balance sheet liability for Social Security is $20.5 trillion.” In short, that means: “Borrowing on this scale…could bankrupt not only the programs themselves but the entire federal government.”
Cox and Archer aptly put the numbers in the context of the current philosophical standoff on tax policy: When the amounts that theoretically must be set aside every year to cover future payouts to entitlement programs are tallied, it becomes clear that “to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually.”
Where to find $8 trillion? Taxes alone won’t get us there—not even close.
Consider, the authors continue: “All individuals filing tax returns in America and earning more than $66,193 per year have a total adjusted gross income of $5.1 trillion. In 2006, when corporate taxable income peaked before the recession, all corporations in the U.S. had total income for tax purposes of $1.6 trillion.”
Translation: If you confiscate all the earnings of people who make above $66,000 a year, plus all of the corporate taxable income at the height of an economic bubble, the U.S. is still shy $1.3 trillion per year to fund the growth of its future obligations. [Forbes, November 27]