Former Oklahoma Senator and Convention of States Senior Advisor Tom Coburn has pointed out time and again that accountants for the U.S. government use tricky, non-standard methods of making the national debt seem lower than it is. According to these accounting methods, the national debt is about $22 trillion.
But as a new report points out, when other liabilities are included, the number is actually much, much higher.
According to an analysis from AB Bernstein, the real national debt is a shocking 1,832% of GDP. Analysts found this number by including traditional forms of debt along with financial debt as well as future obligations for so-called entitlement programs like Social Security, Medicare and public pensions.
As CNBC reports:
The warnings about potential debt hazards come as the total federal debt outstanding has surged to $22.5 trillion, or about 106% of GDP. Excluding intragovernmental obligations, debt held by the public is $16.7 trillion, or 78% of GDP.
That latter total, considered to be more relevant as an economic burden, is likely to rise to 105% by 2028, according to Congressional Budget Office projections. However, the CBO notes that the numbers are subject to revision depending on how government policies play out.
Advocates for fiscal reform argue that the debt impact has indeed reached the point where action is necessary.
“Globally, we have become over-reliant on borrowing as a solution for everything. Political excuses abound for why it doesn’t matter, which just clearly isn’t the case,” said Maya MacGuineas, president of the Committee for a Responsible Federal Budget, a bipartisan committee of legislators, business leaders and economists that counts former Federal Reserve Chairs Paul Volcker and Janet Yellen among its members.
“We are quickly approaching a situation where we have dug ourselves a debt hole which is doing to have profoundly negative effects on the economy for probably decades going forward,” MacGuineas added.
In its calculations, AB Bernstein pulls in debt from a variety of sources and compares it to GDP as follows:
- 100% of GDP using federal, state and local government debt combined.
- 150% for households and firms
- 450% for financial debt, which carries “conceptual issues and risks,” namely that debt held by financial firms often represents potential in a worst-case scenario involving various derivative instruments that can carry high notional levels that are unlikely ever to be realized.
- 27% in trusts for social insurance programs.
- 484%, which values all the promises from current social insurance programs.
- 633%, which tallies up an “infinite horizon” of obligations for social programs, rather than just the traditional 75 years used in computations.
Needless to say, the picture is bleak. Congress is unable or unwilling to make the tough financial decisions for the good of future generations, and our addiction to borrowing is digging the debt hole deeper and deeper.
The people need a way to force Congress' hand, and Article V gives them just that.
Article V allows the people, acting through their state legislatures, to call a Convention of States for the purpose of proposing constitutional amendments. These amendments can mandate a balanced budget as well as impose spending caps. With these and other financial amendments in place, Congress will have no choice but to stop wasting taxpayer money and get our nation's finances back on track.
Sign the Petition below to show your support!
