Don’t confuse the debt with the deficit. The deficit is the measure of what comes in versus what goes out on an annual basis. Last year our tax revenues were $2.3 trillion, and we spent $3.8 trillion. Our deficit was $1.5 trillion.
Don’t confuse the debt with the unfunded liabilities for programs like Social Security, Medicare and Medicaid. Social Security alone has an unfunded liability estimated at $19 trillion. That means we would have to set aside $19 trillion in a fund immediately to keep the promises we made to all potential recipients. The figure is not absolute, because we could change the program any time, which would increase or decrease the program’s unfunded liabilities.
Rather, I want to talk about our national debt. Why? Our debt has major implications for all Americans and especially for the financial services industry. We are presented with the proverbial crisis/opportunity scenario. Understanding and explaining the implications is vital.