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MMD

[YouTube] Dead Dollar Walking: The Truth About Government Debt

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I never understood about "unfunded liabilities" how many years out are taken into account? If the government is planning to be $1 short on the annual budget for medicare indefinitely, would one say that there is $1,000 in unfunded liabilities ... over the coming 1,000 years?

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The short answer to your question is 75 years.

 

However, unfunded liabilities are not calculated in the way you describe.  The numbers you always hear (currently $128 trillion for total unfunded liabilities) are calculated using the Net Present Value method, actuarial data, inflation, current trust fund levels, and expected demographic shifts based on census data.

 

In effect, for the SS and Medicare programs to break even in 75 years ($0 trust fund balance), we would have to invest $128 trillion dollars in the funds today.  Which means each taxpayer would get a bill for $1.1 million, today.

 

The above numbers are from usdebtclock.org, which cites it's source as the Federal Reserve.

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