Monday, August 23, 2010

What is the US Debt?

As the yearly budget deficit has grown radically during the recession, so has the total debt that the United States has accumulated in it's 234+ years of existence.  So how much does the United States owe?  Well... there's really 2 answers to that.  If you want the numbers, here they are.  The total US federal debt is approaching $13.5 trillion and approaching $8.9 trillion.  zFacts has a national debt counter if you want to see what the total debt is, this very moment.  If you'd like an explanation of why there's 2 answers, read on.

As you probably know, there's this thing called the Social Security Trust fund.  Actually, there are lots of government controlled trust funds out there.  Many of them have lots of money in them(Like Social Security).  The first number doesn't add in the value of these trust funds, the second number does.  Which number is the "real" debt number is all in how you look at it.

If you look at it as the trust funds exist and the government has "borrowed" from them to support spending today, then the federal debt is indeed approaching  $13.5 trillion dollars.  However, if you look at all the money the federal government owes minus what it's "saving" in it's trust funds, then the federal debt is only approaching $8.9 trillion dollars.

Before you decide how you want to view the debt, you may want to think about the consequences of your view on social security.  If you view the federal debt as $13.5 trillion, then you must also believe that the social security trust fund is fully funded and will be fine until it runs out in 2037.  Conversely, if you view the United States debt as only $8.9 trillion, then you must believe that social security is already in crises because the so-called "Trust Fund" is nothing but government bonds that have already been spent by the government, and that Social Security checks are going to start coming out of the general fund.

I included this last paragraph because U.S.  government debt is usually reported as the larger number(i.e. Heritage Foundation and OpenMarket).  However, those same organizations then claim that the Social Security Trust Fund has been raided and is empty(See here Heritage FoundationOpenMarket).  Well good news, guys!  If the Trust fund is "empty", then the national debt is only $8.9 trillion.

It is one way or the other.  The United States federal debt can't be over $13 trillion dollars AND have an "empty" Social Security Trust Fund.  Those statements are not compatible no matter how you look at it.  Anyone who tells you otherwise is either a liar or has been lied to themselves.
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