That is the real value of the United States’ debt (in US dollars), according to Chris Cox and Bill Archer, who served on President Clinton’s Bipartisan Commission on Entitlement and Tax Reform (h/t Doug Ross). They argue that the reason the US debt is so underestimated (at about $16 trillion) is due to the way the debt is counted. According to them, the biggest sources of the debt aren’t counted by the Treasury.
As Washington wrestles with the roughly $600 billion “fiscal cliff” and the 2013 budget, the far greater fiscal challenge of the U.S. government’s unfunded pension and health-care liabilities remains offstage. The truly important figures would appear on the federal balance sheet—if the government prepared an accurate one.
But it hasn’t. For years, the government has gotten by without having to produce the kind of financial statements that are required of most significant for-profit and nonprofit enterprises. The U.S. Treasury “balance sheet” does list liabilities such as Treasury debt issued to the public, federal employee pensions, and post-retirement health benefits. But it does not include the unfunded liabilities of Medicare, Social Security and other outsized and very real obligations.
As a result, fiscal policy discussions generally focus on current-year budget deficits, the accumulated national debt, and the relationships between these two items and gross domestic product. We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal government’s true liabilities.
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.
Speaking of the “fiscal cliff,” I always assumed they were talking about the insolvency of entitlements. But, they were talking about something else that is comparatively minor (even if the actual amount of the debt ins’t that high).
I wonder for how long this is going to continue until it all collapses. It will eventually, and I really hope it is within the next 4 years so Obama (and, by proxy, the left) will take some responsibility (after all, leftist policies are the cause of such a large accumulation of debt, even if it wasn’t explicit leftists who enacted them). Given the difficulty the general public has with identifying cause and effect, that seems like the best way for the left to be held responsible. In addition, it would be better to get this crisis out of the way, so real recovery can begin as soon as possible (assuming the Marxists don’t take over the United States at that point).