US family indebtedness to government keeps rising

There is a huge gap in net worth between the young and the old in the United States, and experts tell us that the gap is the "widest ever."  According to a recently released Pew Research Center analysis of Census Bureau data,

"The typical U.S. household headed by a person age 65 or older has a net worth 47 times greater than a household headed by someone under 35 ... this gap is now more than double what it was in 2005 and nearly five times the 10-to-1 disparity a quarter-century ago, after adjusting for inflation."

Additionally,

"The median net worth of households headed by someone 65 or older was $170,494. That is 42 percent more than in 1984, when the Census Bureau first began measuring such data broken down by age. The median net worth for the younger-age households was $3,662, down by 68 percent from a quarter-century ago, according to the Pew analysis."

But there is more. 

"...37 percent of younger-age households have a net worth of zero or less, nearly double the share in 1984.  But among households headed by a person 65 or older, the percentage in that category has been largely unchanged at 8 percent."

In this brief blog, I won't attempt to explain why the disparity exists even though an explanation is desperately needed.  Today, I simply want to call attention to another piece of data that was released yesterday by the Treasury Department and consider it in light of the data concerning the net worth gap.  United States' debt has reached a new plateau.  "[A]s of the close of business on Tuesday the federal government's debt had exceeded $15 trillion for the first time in the nation's history -- hitting precisely $15,033,607,255,920.32."

That's important because "federal debt equals approximately $197,579 for each American family."  In other words, thanks to our federal government's penchant for borrowing and spending the typical American family (and there are 76,089,045 of them) owes more in US debt than it's worth.  Even so-called "wealthy" families in the US, those headed by someone who is 65 or older, owe roughly $27,000 more in federal debt than they are worth.  Younger families, those headed by someone who is under 35, owe almost 54 times more in federal debt than they are worth.

But federal debt is not all that US families owe.  According to a study by Joshua Rauh from Northwestern University and Robert Novy-Marx from the University of Chicago, as of 2010 the fifty US states owed approximately $5.17 trillion in pension obligations alone.  Add to that other state and local debt and you begin to get the picture.  The United States in is serious trouble financially at every level of government and the typical US family is in debt way over its head before household debt estimated in 2010 to be roughly $13.4 trillion is even considered.

We need to keep these alarming statistics in mind as we move toward the 2012 presidential election and especially as we approach the Thanksgiving Day deadline for the congressional Super Committee to submit its plan for solving our nation's debt and deficit problems.

Neil Snyder is a chaired professor emeritus at the University of Virginia.  His blog, SnyderTalk.com, is posted daily.  His latest book is titled If You Voted for Obama in 2008 to Prove You're Not a Racist, You Need to Vote for Someone Else in 2012 to Prove You're Not an Idiot.