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April 1, 2009

Oops! The real number may be $101 trillion!

Quote of the Day: “I, however, place economy among the first and most important republican virtues, and public debt as the greatest of the dangers to be feared.” — Thomas Jefferson (1743-1826), Source: letter to William Plumer, July 21, 1816

Subject: Oops! The real number may be $101 trillion, plus a bunch of other stuff

Somewhere in the blizzard of budget numbers and grand spending plans flooding out of Washington, we missed last spring’s report from the Social Security Trustees. Their latest estimate of the unfunded liabilities for Social Security and Medicare is (hold onto your chair) . . .

$101 trillion

Add to that the $9.3 trillion in deficit spending over the next 10 years, as estimated by the Congressional Budget Office, plus the previous national debt of nearly $11 trillion.

But that may not be the end of it. It’s unclear to us how much the various bailout programs will ultimately cost, and how many of these costs are included in the formal budget proposal. At least three issues complicate the calculation . . .

* Some of the bailout programs carry contingent liabilities that could cause their cost to explode if things go wrong
* New bailouts may be enacted (look for commercial real estate and state/local government pension bailouts)
* The Federal Reserve is also spending/creating lots of bailout money that isn’t reflected in the formal budget

A Reuters story from December 11 calculated the total exposure for the various bailouts at $8 trillion.

But that number has swollen since then. A scholar at OMB Watch told me some things that needed to be added, and after looking up those programs, including the scam-stimulus bill, we believe that number is now over $10 trillion as a CONSERVATIVE ESTIMATE.

But this number is also likely to grow. As will the true costs for the Democrats’ health care, cap and trade, “public service,” and various other social engineering schemes. So here’s the $101-trillion-plus question . . . 

How long will the federal government be able to borrow money to pay its multi-trillion dollar bills? Would you want to continue buying Treasury bonds given that . . .

* U.S. debt obligations are exploding, with no end in sight, and . . .
* The Fed is creating massive amounts of new money that could devalue the Treasury bonds people already hold

At what point does government default become inevitable? Do you want the politicians to keep spending until we find out, or do you want them to step back from the precipice?

Please send another message opposing the budget.

Use your personal comments to mention last spring’s report of the Social Security Trustees, and its estimate of $101 trillion in unfunded liabilities. Tell them to enact NO NEW SPENDING PROGRAMS, and FREEZE OLD PROGRAMS AT PREVIOUS LEVELS.

Ask your friends to join you and do the same.

Thank you for being a part of the growing Downsize DC Army. We added 635 new Downsizers in March, bringing readership of this newsletter to 24,697 as of yesterday.

Jim Babka
President, Inc.

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