Economics

The national debt isn’t $15 trillion. It’s $50 trillion

From a great report on the U.S. national debt from Deloitte Touche Tohmatsu

Measuring America’s debt on an accrual, rather than cash basis, grows the current shortfall from $15.7 trillion to over $50 trillion. America’s debt is traditionally measured on a cash basis, which values the current debt at $15.7 trillion. However, the government regularly releases a report called the Financial Report of the United States Government in which it gives an estimate of the U.S. budget picture on an accrual basis for individual programs.

The inclusion of all of America’s long term unfunded liabilities into a single measure paints a far more difficult future picture for the U.S. over the longer term in which debt totals over $50 trillion dollars.

As with most cost estimates, the primary culprit in these estimates is Medicare, which further highlights the criticality of addressing this mandatory spending program. However, the sheer magnitude of these estimates shows that many deficit reduction initiatives simply fail to move the needle when compared with the stark shortfalls outlined by both the cash and accrual methods of accounting.

 

4 thoughts on “The national debt isn’t $15 trillion. It’s $50 trillion

  1. My knowledge of finance and economics is simplistic at best, so apologies in advance for the following questions:
    (1) Can’t Uncle Sam simply inflate the economy to devalue the debt and thus make it “easier” to pay? Wouldn’t be the first time :-(
    (2) Who would the US “default” to if they couldn’t pay the debt (other than the painful fact that some/all citizens wouldn’t get their promised benefits)?

    Thanks for your work: I may be easily impressed, but I’ve also read/heard your name mentioned by other, more knowledgeable people in media.

    Regards.

    • 1) Inflation cuts both ways, in cost of living adjustments, medical fees and costs, and other sources of the expenditures that are driving the accrual portion of the debt (future costs not current debt). Devaluing the currency only allows the current debt to be paid with cheaper dollars but punts the real problem (future spending) further down the road.
      2) Savings Bond holders, other Treasury Bond holders (foreign and domestic) would lose. Citizens not getting their promised benefits is just another way of saying “cutting spending” to reduce future costs. We spend more than we bring in so default would risk cutting off the funding that allows excess spending.

  2. Come on folks — Speak the Bubba’s English.

    The Bubba translation of the Federal debt is you owe 15.7 trillion on your house and if you could magically pay it off today, you’d have to wheel barrow in 15.7 trillion bucks to be debt free. However, if you take into account all the interest payments you’ll have to make on that 15.7 Trillion dollar house, and when you finally pay that all off, you’ll have paid 50 trillion including interest.

    It even gets better — this 15.7 trillion in debt doesn’t include the entitlement credit cards the gubermint has handed out to Gramma and Grandpa and those on Medicaid and other welfare programs, not does it include the public union pension and health care debts. When that is added in, you’re over 100 trillion in debt, again probably not counting interest…

    Translation — screwed, we’re all screwed… But then debt that big is only important to those with money. So if gubermint hands you a credit card, use it as much as you want, the more you use it, the more things you’ll be able to use it for. Gubermint will never take away anything it gives you. It only takes stuff from people who actually work for a living…

  3. “Gramma & Grandpa”, with every dollar they earned, loaned the “gubermint” some portion of their income, so that the gubermint could invest it wisely. Pension/Healthcare payments to the elderly, in the United States, is money owed. AKA repayment of debt. It’s not some Great Giveaway.

    It’s money that Gramma & Grandpa earned by trusting the government with it for all those years (whether they wanted to or not).

    If the Gubermint didn’t invest it wisely, that’s not Gramma & Grandpa’s fault. Is it?

    Translation – it would definitely help if the HMO’s stopped extracting 200% profit by refusing upwards of 2 out of every 5 claims.

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>