U.S. National Debt at $214 Trillion not $14 Trillion

NPR
August 11, 2011

When Standard & Poor’s reduced the nation’s credit rating from AAA to AA-plus, the United States suffered the first downgrade to its credit rating ever. S&P took this action despite the plan Congress passed this past week to raise the debt limit.

The downgrade, S&P said, “reflects our opinion that the fiscal consolidation plan that Congress and the administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.”

It’s those medium- and long-term debt problems that also worry economics professor Laurence J. Kotlikoff, who served as a senior economist on President Reagan’s Council of Economic Advisers. He says the national debt, which the U.S. Treasury has accounted at about $14 trillion, is just the tip of the iceberg.

“We have all these unofficial debts that are massive compared to the official debt,” Kotlikoff tells David Greene, guest host of weekends on All Things Considered. “We’re focused just on the official debt, so we’re trying to balance the wrong books.”

Kotlikoff explains that America’s “unofficial” payment obligations — like Social Security, Medicare and Medicaid benefits — jack up the debt figure substantially.

“If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That’s the fiscal gap,” he says. “That’s our true indebtedness.”

We don’t hear more about this enormous number, Kotlikoff says, because politicians have chosen their language carefully to keep most of the problem off the books.

“Why are these guys thinking about balancing the budget?” he says. “They should try and think about our long-term fiscal problems.”

According to Kotlikoff, one of the biggest fiscal problems Congress should focus on is America’s obligation to make Social Security payments to future generations of the elderly.

“We’ve got 78 million baby boomers who are poised to collect, in about 15 to 20 years, about $40,000 per person. Multiply 78 million by $40,000 — you’re talking about more than $3 trillion a year just to give to a portion of the population,” he says. “That’s an enormous bill that’s overhanging our heads, and Congress isn’t focused on it.”

“We’ve consistently done too little too late, looked too short-term, said the future would take care of itself, we’ll deal with that tomorrow,” he says. “Well, guess what? You can’t keep putting off these problems.”

To eliminate the fiscal gap, Kotlikoff says, the U.S. would have to have tax increases and spending reductions far beyond what’s being negotiated right now in Washington.

“What you have to do is either immediately and permanently raise taxes by about two-thirds, or immediately and permanently cut every dollar of spending by 40 percent forever. The [Congressional Budget Office’s] numbers say we have an absolutely enormous problem facing us.”

About Luis Miranda
The Real Agenda is an independent publication. It does not take money from Corporations, Foundations or Non-Governmental Organizations. It provides news reports in three languages: English, Spanish and Portuguese to reach a larger group of readers. Our news are not guided by any ideological, political or religious interest, which allows us to keep our integrity towards the readers.

One Response to U.S. National Debt at $214 Trillion not $14 Trillion

  1. madhatter15 says:

    Why is it the Government can only blame Social security and Medicare for their woes? I just heard that Hillary Clinton sent millions to the middle east to fix their broken down mosques, that’s our obligation? All of these wars were paid for by whom? 10 years in Afghanistan is not cheap. This is along with all of the money Obama has been sending ot the Middle east and the money we are handing over to those super humanitarians, the UN for the still starving in Africa and other moneys the UN demands for it’s own agendas, there are no end to those.

    I think the United States should try and figure out what an entitlement is, it is not social security, people pay all of their working lives into that, its mandatory, not an option. You can’t get a job without a social security card, my last child was given a Socil Security card when she was born, to make sure she gave her working years money to the Government. This does not sound like an entitlement to me, it is however an entitlement for the Government, they take half and put it in their General fund and they use it for whatever they want to use it for, they did not pay into that fund, that’s stealing where I come from. Medicare is not an entitlement either, we also pay for that every month, Lets call a spade a spade, they have been using that money for their own needs s well. Now Obama care has been called , in part, unconstitutional, does that mean he will give medicare the 500,000,000 he removed from medicare to pay for his Obama care? I doubt it. He robbed us to pay for his health insurance that no one wanted except other countries who will also participate in that although that was not mentioned. Money has actulally been taken from Medicare to pay for interpreters because they had no where else to take it from.

    Americans have done their duty , they have kept their part of the bargain, they should not be made to feel like Welfare recipients now that they are too old to work and want some return on the money they invested. I think someone ought to see where our money is oging, it is not to “entitlements” it is to the middle east , it is to medicaid for imnmigrants, legal and illegals, when the Koreans , Russians , Mexicans and anyonen else who came in, they were immediately given Medicaid, they never paid into any of this, if you are a Mexican and work in this country for 3 years you can go back to Mexico and get your social securtity benefits. we have to work a heck of a lot longer than that to make any decent pay backs. We are bailing other countries out and stimulous packages for banks and wealthy businesses, we are now going to rent out the foreclosure properties , that sounds planned to me, soemthing is wrong with that picture, Fanny mae is another rescue operation by our Government, they were bankrupt and now they will be renting out your lost home .

    What I would really like to know is why Obama is even campaigning for the Presidential election? He is not eligible, 8 Senators and congressmen ran around like little rats trying to change the constitution so Obama could run legally, John Conyers was one of them, they couldn’t do it, but he ran anyway and won, so how is he eligible and the question should be why is he still in office signing horrendous bills and ruining this country into the ground with his advisoor George Soros, is everyone bought and paid for? How deep is the communist infiltration into this Government that this is allwowed to happen and no one does a thing about it. Maybe when they figure out who is responsible for Americas breakdown and why we are broke and what an entitlement actually is then they might do something. I doubt it.