Bemoaning the national debt? You don’t know the half of it

Federal spending and the national debt. Those are two of the issues to be debated in the presidential election, and then in the trenches of Congress.
The national debt is now over $19 trillion, and growing—although at a lower rate than a few years ago. Without some sort of reform, annual deficit spending will soon be increasing once again. While what’s described as “national debt” is the most discussed debt measurement, let me suggest that we’re missing the boat by worrying about that amount alone.
Who has ever seen comprehensive financial statements for the United States government? If this were available, it would include a “balance sheet” showing all assets and liabilities/debt/unfunded obligations. Properly done, this would include ALL AMOUNTS for which we and future generations are obligated to pay. The $19 trillion amount doesn’t represent anything close to our total obligations.
The U.S. government’s “regulatory accountants,” the Securities and Exchange Commission (SEC), as well as other regulatory bodies, require businesses and non-profits to report based on Generally Accepted Accounting Principles (GAAP). Non-compliance with this reporting requirement can lead to criminal prosecution! As we evaluate national economic policies and results, I argue there’s value in understanding the complete picture of the economic condition of our government. If it’s good for the goose (public and private companies, and non-profits), it’s good for the gander (the U.S. government). Let’s try to piece together at least some of this information.
The $19 trillion debt number includes the impact of previous borrowings used to pay earlier obligations. We’re missing other obligations the U.S. has for future payments—those NOT YET DUE! Included in these obligations are unfunded obligations of Social Security, and other federal programs and trust funds. Interest payments further compound the problem. While our recorded debt is high, the country has benefited from record low interest rates. This won’t last forever and increases in rates could be devastating to our fiscal stability.
Some argue that government trust funds, such as the one for Social Security, will mitigate the problem by providing the funds necessary to pay their obligations. We must remember that those balances are just IOUs from the federal government, not deposits or cash! To ignore the portion of the federal debt that is represented by these inter-government IOUs, would be like paying off a car loan with a home equity loan and thinking you’ve reduced your debt. It doesn’t work that way!
OK! It’s time to quit “beating around the bush.” If we add up all the elements of U.S. obligations which would be reported using General Accepted Accounting Principles, as required of companies by the SEC and other agencies, we arrive at a number that is really scary! It appears that current “unfunded liabilities” of the U.S. exceeds $100 trillion! Add that to the national debt, and the total could be as high as $120 trillion.
Some would focus on reducing “waste, fraud, and abuse” to solve a major part of the problem. That’s a good thing to try and would be very helpful, but there’s not enough of dollars there to be a major part of a solution. OK, let’s tax the rich. If we took all the wealth away from the richest Americans, we couldn’t even pay off the national debt and the entire unfunded liability would be untouched. Then there would be no more rich people to tax or look to for capital investment.
“The bullet must be bitten!” All parts of government will have to be included in any real solution, and that includes entitlement reform!

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204 N. Mill Street
Lake Mills, IA 50450

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