America Will Soon Owe More Than Its Citizens Are Worth
NEW YORK (Dec. 15, 2008) - The sum of America's liabilities and other financial commitments now exceeds the collective net worth of its citizens, the Peter G. Peterson Foundation has calculated using the latest official data. Growth in the government's unfunded promises for social insurance programs such as Medicare, combined with a drop in Americans' net worth due in part by lower home equity values, is causing this unprecedented milestone.
The Foundation's calculations are based primarily on the new consolidated federal financial statements as of September 30, 2008 which do not reflect the additional toll taken by more recent market declines, bailout packages, and record October and November deficits. The financial statements show approximately $56.4 trillion in debts, liabilities, and unfunded promises for Medicare and Social Security versus the Federal Reserve's estimate a total household net worth of $56.5 trillion, both as of September 30, 2008.
"Given more recent developments, it's clear that America now owes more than its citizens are worth," said Foundation President and CEO David M. Walker. "Passing this shocking milestone highlights the need for President-elect Obama and the next Congress not only to turn the economy around and boost consumer confidence, but to put a process in place that will lead to tough choices getting made to strengthen the government's financial condition once the economy begins growing again."
Since its launch in July 2008, the Peter G. Peterson Foundation has invested nearly $11 million in grants to raise awareness of, and seek solutions to the fiscal challenges posed by the rising costs of health care and retirement and near-zero household savings rate. Among the latest are grants to Emory University and the Institute of Medicine to examine health care costs and outcomes; grants to promote pubic awareness and discussion of growing obligations for Social Security and Medicare; and a grant to fund development of a set of key outcome-based indicators that will help the government and the public assess where we stand and how we compare to other industrialized nations on a range of economic and other issues.