True U.S. Debt

by Laura Ehrenberg-Chesler on November 29, 2012

in Debt,deficit spending,Fiscal Policy,politics,taxes,United States of America

Tuesday”sabout the true U.S. debt.  While our politicians and the American people are focused on the “fiscal cliff” coming up December 31st, this article points out the real financial issues facing our country .  It has been decades in the making, and unless all of us are willing to demand that the people who work for us in Washington make the hard choices, there is no doubt that it could permanently impair our country, and our way of life.

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.

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