That Awful US Government Deficit Is No More...

For all of you that decry the US national debt, for fiscal 2007 that started October 1 2006, the deficit fell to around $80 billion well below last year's 7 month tally of a deficit of $184 billion. Receipts have grown 11% and spending only 3% leading to the shrinking deficit. For the year, the deficit may come in at or below 1% of GDP for the US $13 trillion+ economy, about 30% of the total global economy.

Despite these rosier numbers, though, there are looming problems. For the entire history of the Social Security program, revenues have been collected as payroll taxes and used to fund the much lower payments to current retirees. The difference is unified with the general budget and has been generally spent on current programs.

National debt is rapidly approaching $9 trillion. However, of this, $5 trillion is debt owed by the federal government to itself largely to Social Security, largely a book entry of money owed to ourselves. The $4 trillion balance is owed by the public, less than 30% of GDP of this, around half, $2 trillion, is owned by other governments.

Ultimate Social Security liabilities will prove to multiple 10's of trillions and there will not be tax revenue available to pay the promised benefits in the next several decades.

However, this is not unique to the US. Aging populations in Europe, Japan and US where funds have not been set aside to fund promised benefits are the norm.

More on all of this at a later time.