News

The State of the Union

January 14, 2016

1/14/15 - When I was on New Hampshire's WTPL Peter St. James show this morning discussing the State of the Union address, I made the following points:

  • The federal government is the largest financial institution in the world, yet the President did not discuss our financial position.
  • The Presidential candidates, the President and members of Congress assert the national debt is almost $19 trillion. This amount is correct only if you believe that the federal government does not owe most of the Social Security and Medicare benefits it has promised.
  • One of the reasons Social Security and Medicare obligations are not included in the $19 trillion is that government officials, including the chief actuary of Social Security, believe the federal government does not owe anyone any benefits beyond the checks that are written. This is based upon their belief that at any point in time Congress can change the law and cancel all future benefits.
  • If the promised Social Security and Medicare benefits are included, the national debt number would be more than $82 trillion.
  • Financial decisions should not be made without truthful information. An example would be a couple who believes they have $52,000 in the bank, but in reality this money is not there and they have more than $820,000 in credit card debt. If they had this full and true picture of their finances, they might make different financial choices.  Voters, members of Congress and the President are in a similar situation, making financial decisions without considering the truthful information. Trust funds are reported to have more than $5.2 trillion available to pay benefits. Unfortunately, there are no economic assets in these funds. The truth in the country's unfunded debt totals more than $82 trillion. I would think these facts would affect our spending decisions.
  • The President mentioned he wanted to keep Social Security strong. How can that program be strong if we don't know where we are going to get the money to pay more than $28 trillion in promised benefits?

A link to the tape of this broadcast will be available on our website when the station tells us the exact link.

 
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