US national debt is actually $70 trillion

Debt Clock

Source: Press TV

A new study by an American economist concludes that the U.S. federal debt is mind-bogglingly larger than it is officially said to be. The study by James D. Hamilton of the University of California, San Diego, says the U.S. government’s off-balance-sheet liabilities are six times the size of the official debt or $70.1 trillion.

“U.S. federal debt has exploded in recent years, growing from $5 trillion (or 36% of GDP) in 2007 to an estimated $12 trillion (72% of GDP) by the end of 2013,” Hamilton said in a working paper for the National Bureau of Economic Research.

But the $12 trillion federal debt is only the tip of the iceberg because the figure is not inclusive of a number of off-balance-sheet commitments and liabilities.

“But the officially reported debt is only one respect in which current policy has left a burden for future taxpayers. In addition the government has made a number of implicit and explicit commitments that are not included in the net debt figures just reported, but which could potentially require much larger adjustments in future spending or taxes than those associated with paying interest on the official debt itself. The biggest items in this category come from Social Security and Medicare which, if current policy is maintained, will require enormous sacrifices from future taxpayers.”

The study identifies five key off-balance-sheet commitments which are “support for housing, other loan guarantees (including federal loan guarantee programs in addition to those involving housing such as loans for post-high-school education, small business loans and loans from the Export-Import Bank of the United States), deposit insurance, actions taken by the Federal Reserve, and government trust funds.”

The biggest category of off-balance-sheet liabilities comes from the additional funds that the trustees of the Social Security and Medicare trust funds believe would need to be found in order to fulfill commitments to current program participants (i.e., those currently aged 15 and older). These are reported to be $26.5 trillion for Social Security and $27.6 trillion for Medicare.

“These numbers are so huge it is hard even to discuss them in a coherent way … But although one can quarrel with the specific numbers, there is an undeniable important reality that they reflect– the U.S. population is aging, and an aging population means fewer people paying in and more people expecting benefits. This reality is unambiguously going to be a key constraint on the sustainability of fiscal policy for the United States. One would think we should be saving as a nation today as preparation for retirement, and if in fact we are not, the current enormous on-balance-sheet federal debt is all the more of a concern,” the paper says.

“Adding all these items together, I calculate total off-balance-sheet federal liabilities of around $70 T, or 6 times the size of reported on-balance-sheet liabilities,”

The paper working concludes that “Some may argue that the current off-balance-sheet liabilities of the U.S. federal government are smaller than those tabulated here; others could arrive at larger numbers. These off-balance-sheet concerns may or may not translate into significant on-balance-sheet problems. But one thing seems undeniable– they are huge. And implicit or explicit commitments of such a huge size have the potential to have huge economic consequences, perhaps for the better, perhaps for the worse. Acknowledging their size is a necessary first step for making wise policy decisions.”

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  • foytik’s friend

    The current debt is 16.738 trillion, not the 12 trillion this article says. you can check it out, see the daily treasury statement,
    http://www.fms.treas.gov/dts/index.html
    Not sure where they get this 12 trillion figure

  • Greg Burton

    Well, it was either:

    *Prosecute the bankers for the toxic mortgage/LIBOR scams that impoverished the world, making beggars out of all of us.
    *Punish the banking cartel’s (HSBC) multi-billion dollar drug-money laundering operations.
    *Investigate and punish the Bush-CIA-mafia S&L pillage.
    *Investigate why jobs and manufacturing are being out-sourced to China, china is buying US assets at fire sale prices, even as we are about to go to war with China as it threatens the western economy (national security).
    *Stop the looting and privatization of the world’s social safety net and public space.
    *Investigate who was really behind 9/11, the false-flag terrorist attack that touched off the serial, never-ending wars of pillage against the nation-states of the world, creating the pretext for the massive police state edifice now threatening the freedoms of everyone, and providing the “legal basis” for FEMA camp round ups.

    OR…

    Continue to foster the inability of cities and towns to protect their citizens, have the DHS to buy 2.0 billion hollow-point bullets and provide “tanks” to US cities and towns, fly thousands of soon to be weaponized spy drones over everywhere, make being elderly, homeless, jobless and hungry a crime, advocate laws that allow the killing off the “useless eaters”, and create the conditions for martial law (false-flags).