'Tis the season for giving, but for far too long it's been the season for spending—at least where the U.S. government is concerned. Its recent financial report shows where all of that spending is leading us, and it isn't good.
See if you can identify Company X by its spending habits. In 2008 its fiscal year net operating cost was $1 trillion. Just for perspective, this number is triple that of its 2007 costs. Its debt comes in at $10.7 trillion, not counting its suggested unfunded liabilities that now exceed $43 trillion. That means the company is in the hole for at least $53 trillion. If you're thinking this company is in big trouble, you're right. And in case you hadn't figured it out—or were holding out hope that you were wrong—Company X is also known as the United States government.
These numbers, taken from the 2008 Financial Report of the U.S. Government, don't exactly make our nation an entity with a bright economic future. In fact, this recently released report is a holiday gift that makes even the most brick-like fruitcake and ugliest hand-knit sweater look fantastic by comparison.
"Given the current numbers and projections in the report, the U.S. government looks like a company no reasonable person would ever dream of investing in," says Wiggin, coauthor along with Kate Incontrera of I.O.U.S.A.: One Nation. Under Stress. In Debt. "The report is chock-full of scary numbers. But one chart in particular, given the ubiquitous title of "Current Trends Are Not Sustainable," makes particularly clear that the current debt of the nation will only continue to pile up under current fiscal policy."
"You simply cannot see this chart without being seriously worried for the country's future," he adds.
So, what are you seeing exactly? Well, Wiggin spotlights the effects of some of the stats that are listed with this chart in the report:
Over the next 25 years, the share of the population aged 65 and older is forecast to increase from 12 percent to 20 percent (effectively increasing anticipated expenditures), while the share of the nationÕs population that is working and paying taxes (anticipated revenue) will decrease from 60 percent to approximately 55 percent.
Medicare spending has grown at more than 1? times the overall rate of economic growth over the last four decades, and the Medicare Trustees assume that Medicare expenditures will continue to outpace overall economic growth in the future.
Under current law, 30 years from now, government revenues will be sufficient to cover approximately half of all anticipated expenditures.
All of these factors will place strains on the government's spending and add to the national debt, until 2080 when government revenue will only cover the costs of Medicare, Medicaid, and Social Security.
And there's more! Other stats from the report are even more frightening.
In order to fund budget deficits, the government borrows from the public, creating what is called publicly held debt. This amount is also expected to skyrocket. It will be 50 percent of the nation's GDP in 2017, more than 110 percent of the GDP in 2032, and more than 600 percent of GDP in 2080.
These dismal stats and the cavalcade of others in the report led the Government Accountability Office to reach the following conclusion, also published in the report, "The federal government did not maintain effective internal control over financial reporting (including safeguarding assets) and compliance with significant laws and regulations as of Sept. 30, 2008."
"Here's the lesson you should take away from this report," says Wiggin. "What's sinking our economy isn't the Defense budget or Education budget, and for now it isn't even Medicaid, Medicare, and Social Security. What could eventually sink our economy is the interest on our national debt that is just going to pile up and keep on piling up if we don't start controlling our spending and the future obligations of the entitlement programs that will eventually eat up all of the government's revenue.
"These numbers are, frankly, terrifying," continues Wiggin. "And there are certainly similar statistics in both I.O.U.S.A. the book and the movie.
Now that they are coming straight from the horseÕs mouth, I hope more Americans will start paying attention. Everyone needs to be aware of what we are in for. I only wish that a copy of the report was dropped at the front door of every person in America. It absolutely shouldn't be ignored."
(If you'd like to read the report in its entirety, it can be found at
Wiggin is no stranger to providing in-depth analysis of the nation's economy. I.O.U.S.A. illuminates today's financial crisis in a unique and easy-to-grasp way by examining four serious "deficits" the nation faces: the budget deficit, the personal savings deficit, the trade deficit, and most importantly, the leadership deficit.
The book serves as a companion to the critically acclaimed documentary of the same name—a national debt documentary that was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, was recently named as a nominee for the Critics Choice Award for Best Documentary, and is on the short list of Academy Award nominees in the Documentary Feature category.
In I.O.U.S.A. Wiggin consults "The Mount Rushmore Crowd" of the American economic scene to shed light on the economic challenges facing the nation. These luminaries include several experts who have been tapped by President Obama for financial advice, such as Warren Buffett, Robert Rubin, and Paul Volcker, who was recently appointed chairman of ObamaÕs Economic Recovery Advisory Board. Others include Alan Greenspan, Paul O'Neill, Ron Paul, Arthur Laffer, Steve Forbes, William Bonner, and more.
Looking ahead, Wiggin disagrees with President Obama's plan to spend our way out of these economic problems.
"Obama has said he is not going to focus on the challenges we face regarding lack of funding for our entitlement programs or address the national debt, but rather follow the conventional wisdom and spend, spend, spend to stabilize the economy," says Wiggin. "That's worrisome because irresponsible spending is what created this mess to begin with.
"Rather than trying to spend our way out of the crisis, I would ask the president to pressure Congress to renew tough budget controls like the PAYGO rules that expired in 2002 as soon as possible," he adds. "And I'd ask him to take additional steps to cut spending, finance the entitlement programs, balance the budget, and start paying down debt sooner rather than later."
Wiggin says that if you've been trying to block out just how bad things could get, now is the time to take notice.
"Now is the time to pay close attention to the decisions that are being made by our government officials, and we need to hold them accountable at every end," he asserts. "But you should do your part at home as well. Individuals need to save more, invest wisely, expect less from the government, and be willing to pay for the services they do expect. Doing so is the only way we can hope to create
a brighter economic future."