Challenge: Guess the Last Year the U.S. Government Ran a Budget Surplus
There are two kinds of U.S. government deficits: on-budget and off-budget.
The one that gets all the attention is the on-budget deficit. It's relatively small. The big one is the off-budget deficit. That is the deficit in Medicare, Medicaid, Social Security, and other government old-age wealth-transfer programs. This deficit is called unfunded liabilities. The present value of the unfunded liabilities of the U.S. government is about $210 trillion. This is not the looming deficit. This is the present value of the looming deficit. This is what the government would have to invest in private industry, which would (we hope) pay a positive rate of return over the life of the programs.
Sadly, the government does not have a spare $210 trillion in the vault ready to invest.
For a detailed study of this deficit -- the one that cannot be evaded politically -- see Prof. Laurence Kotlikoff's 2015 testimony to the Senate Budget Committee. Click here.
This brings us to the official, on-budget deficit of the federal government. The U.S. Treasury is the source of this information.
Here are the deficits for the 21st century. Subtract the total debt of one year from the next year. That is the deficit. You will see how much the national debt rises each year. This is the annual deficit.
The table that lists the annual changes in the national debt before 2000 is here.
The last fiscal year in which the U.S. government ran a surplus was 1957. Here is the extract for the fiscal years close to 1957.
There was a decrease of a little over $2 billion between 1956 and 1957. That was the last time this happened.
The deficits skyrocketed upward under Ronald Reagan.
What about today?
Congress refuses to face the reality of either of the deficits. Congress prefers to kick the can down the road. This is what voters demand. They will not tolerate cuts in Medicare, Medicaid, and Social Security. They also will also not tolerate tax increases. This leaves these strategies: kick the can, pretend, conceal, ignore, shrug, and the most important strategy, retire with a pension. How big a pension? This is from Investopedia.
The median net worth for a member of Congress surpassed $1 million in 2013, where it remained through 2016. This compares to the average American household median net worth of less than $60,000. As reported by the Center for Responsive Politics, "it would take the combined wealth of more than 18 American households to equal the value of a single federal lawmaker's household." Entering 2016, approximately 8% of U.S. households could be classified as millionaires, compared to more than 50% of the members of Congress.Congressional members are eligible for their own unique pension plans under the Federal Employees Retirement System (FERS), though there are other retirement benefits available, ranging from Social Security and the Civil Service Retirement System (CSRS). Currently, members of congress are eligible for a pension dependent on the member's age at retirement, length of service, and salary. The pension value can be up to 80% of the member's final salary. In 2016, congressional pay was $174,000 per year, which, at an 80% rate, equates to a lifelong pension benefit of $139,200. All benefits are taxpayer-funded.
Additionally, members of Congress enjoy the same Thrift Savings Plan (TSP) as all other federal employees, which is similar to a 401(k). More taxpayer funds are used to match congressional contributions up to 5% per year, in addition to an extra 1% giveaway regardless of how much the Congressman contributes, if anything. Because members of Congress earn far more than the average American citizen, their initial Social Security benefits average more than $30,000 per year compared to just $18,000 for a middle-class retiree.
Few private employees have the option to contribute to an employer-sponsored defined benefit pension plan. Most have the option to contribute to a 401(k) or 403(b), while others may contribute to an employee stock ownership plan (ESOP) or some other retirement option. The median benefit for private pensions and annuities was approximately $10,000 per year in 2015. For those receiving Social Security and a private pension, median income was between $30,000 and $35,000 per year. As far as other retirement assets, research from the Federal Reserve in 2013 found that the median retirement account balance was $59,000 and the mean balance was $201,300.