1. Executive Summary
2. Introduction
3. Measuring Total Debt
4. Estimates of the Entitlement Liabilities
5. Reporting Entitlement Liabilities
6. Conclusion
7. Notes
8. About the Authors

Social Security and Medicare have made future promises far in excess of tax revenues that will be collected at current tax rates. The difference between what has been promised to current and future generations and what will be collected from taxes dedicated to fund these programs is an "unfunded liability."

How large are the federal government’s unfunded obligations? That depends on how we measure them.

• If we confine our horizon to the next 75 years, as government actuaries have traditionally done, the unfunded liability is about $18 trillion in today’s dollars — more than six times as much as the federal government’s outstanding bonds.
• If we focus only on people who are already participating in the system (either as beneficiaries or as taxpayers), the government’s net debt is more than $24 trillion — more than twice our current gross domestic product (GDP).
• If we consider only benefits that have been accrued so far (i.e., if we ended the program tomorrow and only paid benefits people have already earned), the debt is about $30 trillion — about three times the size of our GDP.
• If we look indefinitely into the future — and include not only people who are participating today, but all future generations who will pay taxes and draw benefits — the U.S. government’s Social Security and Medicare unfunded obligations are equal to almost $50 trillion in today’s dollars.

What does it mean to say that we have $50 trillion in unfunded obligations? It means that in order to ensure the government will keep all its promises, we need to have $50 trillion on hand right now, invested at a rate of return of about 6 percent. The failure to have these funds on hand and invested today means that the overall obligation will become larger and grow through time. It also means that the programs are severely underfunded at today’s tax rates. To close the funding gap, we will have to endure either substantial tax increases or significant benefit cuts in future years.