The Debt Clock has been popular news over the past year as the Wall Street Journal reported this past October of it running out of space upon reaching $10 trillion just eight years after it had been negative due to surplus funds. Under the Command of President Bush our nation’s debt increased at an average of approximately $1.4 trillion a year. To alleviate this, the American people elected Barack Obama to the presidency, who promised transparency in spending, among other things.
Has Change Really Come?
No economist would call George W. Bush conservative save for those who would praise his phenomenal ability to spend more with less, but the complement to the former president’s actions is a 2010 budget proposal from President Obama that currently projects an additional debt of $1.75 trillion.
These events tend to mean little to many citizens as the lending and printing of various billions and trillions of dollars go around as though they were derived from magic rather than having a cause/effect relationship with the dollar compared to other currencies as well as commodities such as sugar, tobacco, and gold.
How Much we owe, and Who’s Going to pay for it
According to the 2007 US Census there are 302 million people in the US. 24.59%, or more than 74 million, are under the age of eighteen. According to these numbers each of these children will inherit an obligation to pay a share of the near $13 trillion that has been accumulated over a mere decade, and that share will be $175,056.35. Attached to that is a very real estimate of $50 trillion for social security and health care that will be needed for the coming (and, in some cases, present) retirement of nearly 80 million baby boomers. This $50 trillion is a fair estimate as it accounts for each boomer collecting $625,000 in entitlements, bringing the total inherited debt for these youngsters to $848,350.03. [Readers: note that this number assumes that the debt will not increase due to the ongoing malfeasance of elected officials, and that only these 74 million Americans will be responsible for the burden].
Detractors to this argument will make truthful claims that not all boomers will collect that much; some will die, others will have their own supplemental health care plans, and a few will have made too much money to be eligible for the payments despite their forced contribution through withholding. Another argument is that if health care is completely socialized under the reign of the government, then the elderly will not be afforded the care they need since they would be denied as a result of being unable to contribute any longer to the nation’s coffers. This is one area where it becomes personal. Another deals with the nation's youth.
Little Jacob Gomez
For the sake of this article a personalization has been made. Jacob Gomez of Seaford, NY was born on March 30, 2009. Jacob, as he is called by his parents, Heidi and Sam, was born into an incredible inheritance of $848,350.03 of which he is obligated to pay to the government of the United States (not to mention that which he must cover for the fiscal irresponsibility of the state in which he resides).
Luckily for Jacob, there will be no pressure for him to pay this federal debt (state debt will not be covered in this article). No collection agent will pressure him to pay it and no measurement, save for the US National Debt Clock, will be made on his behalf and forwarded in the form of monthly statements.
Jacob will merely have his earnings siphoned prior to his seeing them for as long as he works for earned income (that which he will receive from an employer). If he was to become self employed he would still have the government claiming his earnings, but following the costs he has taken on in his risk to support himself, also known as tax breaks. For all intents and purposes we will view Jacob in his capacity to meet his obligation if he was to become a neurologist.
Jacob in the 28-33% tax Bracket
As a physician of neurology, Jacob will earn a median salary of $154,070, according to PayScale.com. If Jacob was to work for 10 years earning this salary with a 5% annual raise he will have earned over $2.1 million. For the majority of these years he will be taxed at 33% on his income, and will have paid over $600,000 in taxes toward his debt. So long as no more debt is accrued on Jacob’s behalf he will, as a neurologist, be very likely to cover his obligation with ease.
Educated Professionals in the 25% Bracket
A middle income earner of $60,000 (a teacher in Seaford, NY, business manager, or IT technician) with the same annual pay raises as Jacob will earn over $754,000 in ten years of working. If 25% of their salaries are withheld, their income taxes will have contributed more than $180,000, making it still possible for the rich and the healthiest, most profitable middle class people to cover their current obligated debt within a reasonable working lifetime of forty years.
The Need for Conclusive Data
Sadly, this data is not conclusive, and leaves out the poor, who will not be able to cover their share of the burden. Additionally, the war in Afghanistan has no stated end date and domestic spending is not being curtailed to make up for the increases made overseas, leaving many to believe that this debt that Americans like three-week-old Jacob Gomez will find to be his birthright could potentially overtake even the strongest middle income earners.
At the risk of adding insult to injury it should be noted that most private sector employees, including physicians, find that their salaries fall in the second half of their working years.
For more information on national, private and unfunded debt go to:
http://www.usdebtclock.org/
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