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3
• Joe has a good job and plans to retire in 5 years.
THE SITUATION
• Judy stays home with the children.
• Grandma had a stroke last year and is in a coma.
• Johnny and Sally attend private school.
4
Joe has a nice income of $129,000 per year. However, the Fed Family is living beyond their means.
They have no cash and had to add over $12,000 to their credit card debt
• 2010 Gross Domestic Product
• The Fed Family share of the 2010 deficit
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They have $79,473 in credit card debt
In order to make ends meet, Joe borrowed all the money from Grandma’s trust account: $40,149
• Fed Family share of publicly held debt
• Fed Family share of amount “borrowed” from Social Security trust fund
6
Grandma’s estimated care at the Park Avenue Nursing Home over the next several years is: $200,000
But Joe doesn’t think he’s signed a contract, so he isn’t worried….
• Fed Family share of obligation to Social Security and Medicare
• Some say this estimated obligation is not a liability…
9
Let’s not visit Aunt Frieda
this Saturday!
Great idea! But that will only
save $263!
The value of $30 billion in cuts toward deficit reduction
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I know, I’ll go to the bank and extend our
credit card limits!
Unfortunately Joe’s bank is now a subsidiary of the Bank of China and won’t extend more credit until the Fed Family gets its act together!
As of May 2011, China holds 36 percent of all foreign-owned Treasury Securities (16 percent of total public debt)
12
Joe ― resigns himself to working 5 more years
Johnny and Sally ― go to public school
Max ― gets dry dog food
Grandma ― moves to a more suitable nursing home
Judy ― takes a part-time job
Bank extends credit after approving a payment plan that begins to reduce the outstanding balance
THE PLAN
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Analysis of Federal Liabilities, Intragovernmental Debt and Social Insurance Obligations
(in trillions) 2010 2009
FEDERAL LIABILITIESPublicly held debt 9,060 7,583
Federal employee and VA benefits 5,720 5,284
Other 1,576 1,257
Intragovernmental debt (owed to trust funds) 4,577 4,391
FEDERAL SOCIAL SERVICES OBLIGATIONSSocial security 7,949 7,677
Medicare (Parts A,B & D) 22,813 38,107
Other 97 94
Total liabilities, intragovernmental obligations and Social Insurance 51,792 64,393
Current dollar GDP (3rd quarter 2010 and 4th quarter 2009) 14,750 14,119
Publicly-held debt as a percentage of GDP 61 54
Liabilities and obligations as a percentage of GDP 351 456
Resources
• www.vscpa.com/FiscalResponsibility• www.aicpa.org/WhatsAtStake• http://tinyurl.com/2011CitizensGuide
(PDF)• http://www.fms.treas.gov/fr/index.html• http://datapoint.apa.virginia.gov/