Economist Presents Scary US Debt Number: $70T
James Hamilton: That's the 2012 total of off-balance-sheet federal liabilities
By Kate Seamons, Newser Staff
Posted Aug 15, 2013 11:24 AM CDT
A sign showing the U.S. national debt is displayed in New York, Monday, Dec. 31, 2012.   (AP Photo/Seth Wenig)

(Newser) – If you're worried about our country's fiscal health, you may want to stop reading. A UC San Diego economics professor sees a problem area we're overlooking: "the growth of federal liabilities that are not included in the officially reported numbers." James Hamilton did the math, and claims that these off-balance-sheet federal liabilities totaled $70.1 trillion as of last year; that's six times the $11.9 trillion in US debt held by the public (ie, the reported on-balance-sheet debt), according to the Treasury Department. Here's Hamilton's breakdown of unfunded liabilities, per the San Diego Union-Tribune and the Washington Examiner:

  • Medicare obligations to future retirees, $27.6 trillion
  • Social Security obligations to future retirees, $26.5 trillion
  • Fannie Mae, Freddie Mac, FHA, and other housing commitments: $7.5 trillion
  • FDIC-insured bank deposits: $7.6 trillion
  • Other government trust fund obligations: $1.8 trillion
  • Student loan program liabilities: $325 billion
  • (Hamilton also factors in a reduction in that liability to get to $70.1 trillion; he explains it here.)
Hamilton acknowledges that "these off-balance-sheet concerns may or may not translate into significant on-balance-sheet problems," but that doesn't change the fact that "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."

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Showing 3 of 229 comments
jonnynonos77
Aug 16, 2013 12:03 PM CDT
There is a lot of misunderstanding on this issue regarding "social security can't go broke" etc., so here is a basic reality for the people who suggest the government can keep printing money, etc., to pay for all its liabilities, via Professor Laurence Kotlikoff. "I've received a large number of comments to my Bloomberg column, which lays out why table IVB6 is the only appropriate measure of the system's insolvency. Many of the comments suggest that Social Security can never go broke because the government can always print money and give it to Social Security beneficiaries. But Social Security's obligation is to paying real benefits, i.e., providing people with money that will suffice to purchase a basket of real goods and services. The government can hand us each 20 million $1 bills. As we spend it, this will drive up the price level sky high and leave us, on average, consuming nothing more in real terms. So printing 20.5-trillion dollar bills is no answer. Doing so will lead to hyperinflation and leave our country in even worse shape."
K.KRANK
Aug 16, 2013 12:47 AM CDT
Good thing the Fed can print money & regulate interest rates.
Ivan_the_Gypsy
Aug 15, 2013 8:39 PM CDT
Good going U. S. Senate. You haven't had a budget in 4 years. Those multi-million dollar vacations and shopping trip to Europe Obama and his fatass wife are making are piling up, too.