Mountain Biker, you need to read that 2012 WSJ article.
The article title is, “Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt”
The article is about how the numbers the Feds have been leading everyone to believe are the actual figures are not the real numbers, and by a huge amount. The Feds have been using devious accounting methods to camouflage how big the numbers really are. The numbers from the Federal Government that everyone has been fed by the media are way too low.
This is why the WSJ is saying that the reported annual deficit is less than 1/5th what it really is.
If that greater than 5x increase in the real deficit numbers were applied directly to that $1.3T Social Security and Medicare number you were using, it would start getting close to $7T. That is a rough way of looking at it, but it illustrates the scope of how inaccurately low many of the numbers are that everyone has been playing with.
Here is a quote:
When the accrued expenses of the government’s entitlement programs are counted, it becomes clear that to collect enough tax revenue just to avoid going deeper into debt would require over $8 trillion in tax collections annually. That is the total of the average annual accrued liabilities of just the two largest entitlement programs, plus the annual cash deficit.
Here is another quote:
The actual liabilities of the federal government—including Social Security, Medicare, and federal employees’ future retirement benefits—already exceed $86.8 trillion, or 550% of GDP. For the year ending Dec. 31, 2011, the annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than one-fifth of the more accurate figure.
Why haven’t Americans heard about the titanic $86.8 trillion liability from these programs? One reason: The actual figures do not appear in black and white on any balance sheet. But it is possible to discover them. Included in the annual Medicare Trustees’ report are separate actuarial estimates of the unfunded liability for Medicare Part A (the hospital portion), Part B (medical insurance) and Part D (prescription drug coverage).
As of the most recent Trustees’ report in April, the net present value of the unfunded liability of Medicare was $42.8 trillion. The comparable balance sheet liability for Social Security is $20.5 trillion.