America’s Real Federal Deficit

It shouldn’t surprise Americans that their government has not told them the whole truth about our federal deficit.  However, the “USA Today” on May 24, 2012, unveiled a more accurate accounting telling us how deep we are in debt… and it’s about four times deeper than we were told.

According to our executive and legislative branches, our federal budget deficit was $1.3 trillion in 2011.  The actual amount was $5 trillion after counting liabilities for Social Security, Medicare, and other federal retirement programs.  There is no logic in ignoring these large amounts except that it shows that we are deeper in the hole than we thought.  It is interesting that federal law requires companies to report retirement commitments in their financial statements, but the federal government exempts itself from this requirement.

This deficit would equal to $42,054 per household.  The last Census indicated that the median income per household was $49,445, leaving us all a whopping $7,391 to pay for our house, car, groceries, gasoline, utilities, health care costs, and other household expenses.

And don’t blame the Democrats or Republicans.  This is a “twofer” special where both parties share the blame.  Over the years, it hasn’t mattered which party ran Congress or the White House.  Both parties used the same accounting system to avoid counting the retirement benefits.

In case you planned on buying a home or car in the future, you should know that each household in the United States owes $561,254 of the federal debt.  I wonder if we can file for bankruptcy.

Young and Underemployed

My wife and I treated ourselves to a nice dinner last night.  We had a very intelligent waiter who served us.  We started talking to him and found out that he had a degree from an east-coast university.  But he can’t find a job related to his education.

We have friends whose children have graduate degrees and are working as servers in restaurants.  Unfortunately, this is not a small problem.  About one in three young Americans are underemployed.  And they don’t have high hopes of getting a better job.  Some of them have a huge student loan to pay back.  Many of these children have moved back home with their parents to reduce their expenses.

The U.S. economy has been harder on young adults, aged from 18 to 29, than workers between 30 and 64.  The unemployment rate for this young group has been increasing.  It went from 12.5 percent in March to 13.6 percent in April of 2012.  The unemployment rate for ages 30 to 49  was 7 percent in April, and for ages 50-64 it was 6.2 percent.

But when you add in those who are working part time looking for full-time jobs, the situation looks rather bleak for the younger generation.  In April, 18.4 percent of those aged 18 to 29 were working part time because they could not find a permanent job.  Combining the unemployed to the underemployed, brings the total to 32 percent or about one out of every three in this age group.

Gallop polls indicate that only 3.1 percent of these young adults are self-employed.  Most of them lack the necessary experience, knowledge, and finances to succeed in self-employment, which is a difficult task even under the best of circumstances.

This is more than a temporary setback.  The younger adults do not obtain the experience they need to get a better job in the future.  Their resumes either have glaring gaps or underemployed positions that sometimes don’t get past the first cut made by companies.

It would be nice if politicians set aside partisan politics and established military and public service positions for these young adults, so they can gain experience that U.S. companies will need in the future after baby boomers retire.

Israel and other countries have successful programs requiring young adults to serve their countries before entering the workforce.  This will not only provide them job experiences that can translate into future positions with the private sector, but it is an excellent way to motivate young adults.  If they like the government service, they might elect to stay with it.  If they don’t like the service, they will be highly motivated to go back to school or find a better job elsewhere.  And they will have a strong resume to make this transition.