Twenty-three point nine trillion dollars. That will be our national debt in 2022 under the fiscal-cliff bill that just passed Congress. That’s nearly $4 trillion more than the current-law baseline, and while most of that comes from making the Bush tax cuts permanent for most Americans without offsetting the loss of revenue through spending cuts, at least $330 billion of the new debt results from the increased spending that was part of the deal. Our government debt will amount to more than 118 percent of GDP.
It has largely gone unnoticed amidst the hullabaloo surrounding the fiscal cliff, but regardless of what happens with the cliff negotiations, taxes are going up next year. The president may be calling for $1.6 trillion in tax hikes by 2022 in exchange for not driving the country over the cliff, but that does not count Obamacare, which will impose an additional $1 trillion in new or increased taxes over the next ten years, a big portion of which take effect in 2013.
For all those who think that our deficit is caused by a dearth of revenue, consider this thought experiment. In 2012, the federal government will spend $3.56 trillion. Last week’s Powerball jackpot was a reported $587.5 million, the largest winning Powerball payout ever. In order to finance current spending, the federal government would have to hit that jackpot 6,570 times.
How many times have we heard that the only thing standing in the way of a grand bargain to reduce our growing national debt is Republican intransigence on taxes? If Republicans would only agree to dump Grover Norquist, Democrats will agree to cut spending and reform entitlements. Then, we can all join hands and sing Kumbaya as we usher in a new era of compromise and fiscal responsibility.
The wind and rain from Hurricane Sandy hadn't even stopped before some people argued that the storm made the case against reducing the size of the federal government or giving states more say in their affairs. The federal response to a crisis became the proxy for big government in all its bureaucratic glory. Cutting government, we were meant to understand, means letting Sandy's victims fend for themselves.
Let's try to put the ongoing debate over the future of Medicare into a little bit of context. Last year, Americans paid $274 billion in Medicare taxes and premiums. At the same time, the program paid out $564 billion in benefits. That amounts to a shortfall of roughly $290 billion. Looking into the future, even the most optimistic estimate by the program's trustees puts Medicare's future unfunded liabilities at more than $38.6 trillion. More realistic projections suggest the shortfall could easily top $90 trillion.