What's In and Out of the Federal Debt
Managing Editor, CNBC.com
As the political season narrows down to the actual two man fight for the White House, the size of our federal debt will become a bigger and bigger issue.
Far be it for me to suggest politicians may distort some numbers, but, well, they might. And for a variety of reasons (time, space constraints, ignorance) press coverage sometimes overlooks the opportunity to keep them honest about the entire debt picture.
So here’s a quick primer, courtesy of some calculations from the Institute for Truth in Accounting.
Our REPORTED federal debt is $15.5 trillion. That includes $10.8 trillion in public debt…money used to run basic government operations … and $5 trillion in trust fund debt for things like highway work and airports.
The $15.5 trillion number is what gets thrown around most in political debate and coverage.
But there is a bunch of government spending commitments NOT included in that $15.5 trillion number. These include almost $6 trillion in expected retirement benefits for federal employees and veterans, $8 trillion in Social Security benefits that will come due, and the biggie…. $37 trillion in Medicare benefits.
Thanks to various government accounting rules, these numbers don’t get included in the main number until they actually come due. It strikes me that's a little like only counting your car payment, rather than the whole car loan, as your debt load. But better minds than I come up with these rules.
Check out the chart:
Altogether these obligation numbers come to about $63 trillion on the federal debt credit card. That’s a pretty hefty outstanding balance. Hard to believe it gets overlooked.