National Debt

A Very Good Question about Our National Debt - Jim Manzi

A very smart commenter at the American Scene called “cw,” who almost always disagrees with me in a highly productive way, asked what I think is an excellent question:

So here is a technical question for Jim or whoever else can answer it: how much would taxes need to be raised to maintain our current entitlement regime?

The total present value of payments expected under Social Security and Medicare beyond what is expected to be collected under current tax laws is about $100 trillion. One way to put that amount of money in context is to note that it is about twice the amount of all the net private assets that exist in America today.

To answer cw’s question directly, the best back-of-envelope estimate is that meeting this unfunded portion of our Social Security and Medicare commitments would require roughly an immediate 80 percent increase in federal income taxes, sustained forever.

That is one end of a spectrum. The other is to cut out $100 trillion of present value of anticipated entitlement spending.