The Unfunded Liability Crisis on the Horizon

What Can’t Continue Won’t, And That’s a Huge Problem for the Treasury

The American Tribune

“When you get into debt, you become a slave.” -Andrew Jackson1

America, or at least what’s left of the historic American nation, feels under siege. Lakin Riley’s murder on the UGA campus at the hands of a twice-arrested, twice-released illegal immigrant from Venezuela2 showed that nearly nowhere is safe with the current leadership team in charge. Our woke Navy and Air Force are having trouble with the Houthis, so the Suez Canal is shut.3 American cities are reminiscent of Johannesburg,4 and our infrastructure increasingly feels like that of the Congo after the Belgians left.5

But while those issues and others are problematic, there’s a much bigger issue on the horizon: the crisis of the federal government’s unfunded liabilities, which are payment obligations it has, mainly from Social Security and Medicare, that are not funded by Congress and so the expense is lurking and will need to be paid for with tax dollars or debt in the future.6 Put simply, they’re the difference between the payment obligations of government programs and the assets set aside to pay for them.7 That difference totals $213 trillion.

In this post, we’ll discuss what America’s unfunded liabilities are, their mind-boggling scale, and why they’re likely to lead to the ruination or transformation of America.

Note: This article is a stand-alone, but in reading it, referencing our posts on the lurking issue with Social Security’s funding, how the government lies about inflation to inflate away its liabilities, and America’s hidden unemployment crisis will likely be helpful in understanding the issue. Further, our article on the West’s civilizational decay will help with understanding the mindset that led to this crisis.

$34 Trillion? Try $213 Trillion

The National Debt Since the Mid-Twentieth Century

Before explaining the unfunded liabilities crisis, a brief history of the national debt and federal spending since the mid-40s is necessary, as it will help show the scope of the titanic unfunded liabilities issue.

Coming out of World War II, the US was burdened by an immense national debt, but able to work its way out of that burden by growing the economy. As the sole industrial power not ravaged by the war, the US held a tremendous share of the world market, had the new world reserve currency, and had the gold reserves to back up that currency, thanks in no small part to British weapons spending during the war.8 So, though the fiscal burdens of the early Cold War were immense, they could be paid for and debt as a percentage of GDP dropped dramatically. That success in reducing the relative size of the national debt came thanks to real economic growth that led to general prosperity, along with a growing population from the Baby Boom. Further, the growing economy and population helped pay for FDR’s welfare programs and Social Security while pushing the debt as a percentage of GDP back down.

Things then changed in the mid-60s, with the Johnson Administration. By that point, the world’s industrial capacity had recovered from the war, so America’s share was smaller and decreasing.9 The Vietnam War was increasingly expensive in terms of not just blood, but cash. The entitlements created by the Johnson Administration added an unconscionable amount of entitlements with its Great Society programs.10

So, when the French sent a naval vessel to pick up the gold due to them, America had to renege on its debt obligations. Instead of sticking to the gold standard and paying the French what they were owed, Nixon broke the bonds of fiscal restraint and took America off the gold standard. Afterward, the government could print any amount of money required rather than only the amount that could be backed by gold in its possession.11 Carter’s presidency was a malaise-filled mess12 because of the resultant inflation, and Reagan then redlined the economy with debt to drag America out of that malaise. He succeeded in bringing positivity and economic growth back, but at the cost of tripling the national debt.13

Since Reagan broke the spell of self-imposed (rather than gold-imposed) fiscal responsibility, presidents have been spending like drunken sailors. HW spent so much that he had to raise taxes despite the “peace dividend” from the end of the Cold War.14 Clinton was saved by the Internet Bubble and post-Gulf War drawdown, but was hardly a fiscally responsible cost-cutter.15 Bush spent unprecedented sums on the War on Terror while also expanding welfare programs,16 and Obama nearly doubled the already massive national debt.17Trump then spent enough to make his predecessors look prudent, one of the biggest problems of his presidency. Biden has been even worse, with the deficit an unprecedented $1.7 trillion in 2023, one outdone only by the spending of the Covid years.

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