There was an article linked by Drudge Report saying that each taxpayer in the United States now "owes" $1.1 million to fund the federal debt. The article includes the national debt of $17 trillion, plus the unfunded liabilities, which was put at $126 trillion. As the article explains, the majority of the unfunded liabilities consists of Medicare ($87.6 trillion) and Social Security ($16.6 trillion).
While the article is slanted in particular against Obama and the Democrats, it is pointed out that the Medicare prescription drug legislation that was passed in 2003, and signed by Bush, adds $22 trillion to the unfunded liabilities.
The scary thing about this article is that the estimate for the unfunded liabilities might be really low. If you take Laurence Kotlikoff's numbers, he puts the unfunded liabilities at $222 trillion as of last year. In other words, it could be that each taxpayer has a supposed liability in the neighborhood of $2 million.
I am not sure how exactly the article defines a "U.S. taxpayer", but it gets its point across. Even on a per person basis, which would include children and retirees, the amount per person would still be hundreds of thousands of dollars. And, of course, U.S. taxpayers are considered because children won't be paying taxes (yet).
So how is each working person going to come up with a million dollars or more to pay for his share? The answer is that he won't. It is not statistically possible to pay for all of the unfunded liabilities. Even if it were possible, there is no way the electorate would put up with it.
So what does all of this mean? It means that the U.S. government is going to default. It can significantly raise the retirement age to collect Medicare and Social Security. It can reduce the cost-of-living increases well below the actual price inflation rate. It can use means testing to eliminate payments to those with more wealth. Most likely, a combination of all of these things will happen.
As the article rightly points out, Obama and the other politicians can talk all they want about reducing reimbursement rates for Medicare. But this almost never comes to fruition. And as the article says, the chief actuary thinks most doctors won't see Medicare patients if there are major cuts.
I don't know if the government will officially repudiate its debt or just pay it back with money that has depreciated. But it is almost a certainty that there will be major changes in Social Security and Medicare. They are simply unsustainable as they stand now.
If you are 55 or younger, don't plan to retire before the age of 70, unless you are going to do it without any government "help". In fact, you can almost plan that you will have to be at least 75 for any government retirement "benefits", if you ever see any at all.
It is tougher to predict for those who are currently in their upper 50's and early 60's. It will just depend on how fast things break down.
I expect that future elections will be more young vs. old than Republican vs. Democrat. While older people are more organized in their voting, I think younger people will hit a breaking point. Young people who are working long hours and struggling to put food on the table for themselves and their family are not going to be willing to pay more in taxes so that his retired neighbors can play golf and take big vacations in Europe.
So while it is interesting to note the huge liability of each U.S. taxpayer, the taxpayers will shed off these liabilities at the voting booth, at least at some point. If you are old, don't depend on Medicare and Social Security too much. If you are young, don't depend on them at all.