Twenty trillion dollars. That is the estimate of federal indebtedness by 2020. But that $20 trillion is just the federal debt: it does not include $3.4 trillion in current annual spending, nor does it include state and local obligations.
Government has no intention of paying off this debt -- only of continuing to add to it. What that means is that taxpayers are obligated to service this debt (and whatever is added to it) at prevailing interest rates forever. Those rates could range from 3% on up -- to whatever rate the bond market assigns. Generally speaking, the more debt a nation incurs, the higher the rate over time.
At 3%, the annual cost of servicing a $20-trillion debt is $6,000 per taxpayer (assuming that half of all Americans pay no federal taxes), or $12,000 per middle class couple. This amount is in addition to whatever Congress appropriates each year. By 2020, the annual appropriation (currently at $3.4 trillion) may well reach $5 trillion, which is $50,000 per taxpayer. Assuming that $1 trillion of this amount is passed along annually to the national debt, the immediate obligation would be $40,000 per capita. Add $40,000 to $6,000 and we get $46,000, or $92,000 per taxpaying couple.
The Heritage Foundation provides a similar estimate. Federal spending in 2010 will come to $30,543 per household, at least half of which pay no income taxes. A conservative estimate of a 60% increase in spending by 2020 implies federal spending of nearly $50,000 per household, half of whom pay no taxes.
These figures do not include state and local tax obligations, which consist of future pension liability and bond indebtedness. California, for instance, is in hock by $68 billion (December 31, 2009 figure), or $1,838 per capita. This may seem like a modest figure, but it does not include a 2010 deficit of $19 billion, nor does it account for future pension and benefit obligations.
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