How Much Washington Really Owes: $100 Trillion – WSJ
Unfunded entitlements are more than twice as large as the official national debt. The problem is growing.
By Vince Kolber – The Wall Street Journal, Dec. 20, 2022 – Excerpts:
It will be weeks before the U.S. Treasury releases its financial report on the federal government for the 2022 fiscal year, which ended Sept. 30. But Washington’s spending has already reached a historic and troubling milestone. This news was hidden in the Treasury’s report for fiscal 2021, released last February.
The issue arises from the way Treasury accounts for future spending that is required by law. It reports two separate figures, “net position” and “social insurance net expenditures,” but it doesn’t add them up into “total obligations,” and thereby deprives lawmakers and taxpayers of a full picture.
Net position is the difference between U.S. government “assets” and “total liabilities.” Importantly, total liabilities include only bonded debt—that is, U.S. Treasury bills, notes and bonds. Total liabilities were $34.8 trillion at the end of fiscal 2021. The Treasury reported assets at $4.9 trillion. Simple arithmetic brings us to the net position, negative $29.9 trillion.
But this accounting leaves a lot out. Social insurance net expenditures calculates the difference between the expected future liabilities of Social Security, Medicare, Medicaid and similar programs over the next 75 years and the income these programs are expected to generate during the same period under current law. The Treasury reported these unfunded liabilities at $71 trillion at the end of fiscal 2021.
That brings us to the alarming milestone. Add the net position of $29.9 trillion to the social insurance net expenditures of $71 trillion, and you find that they topped $100 trillion—the first time they have ever done so.
Government accounting specialists argue that the Treasury is right to keep these categories separate. They contend that social-insurance obligations aren’t truly debt because Congress has the power to curtail them by changing the law. But lawmakers have failed to do so for nearly 40 years and, until they do, the unfunded liability exists and is a present economic danger. By Treasury’s accounting, the amount these programs’ costs are expected to exceed their revenue is more than twice the net position—and the latter figure alone is what is commonly known as the national debt.
The burden is quickly growing. Between 2011 and 2021, total obligations more than doubled, increasing at an annual pace exceeding 8% at a time when economic growth was less than 3% a year. The explosion of total obligations is the most underappreciated reason that inflation may become an indefinite reality.
Members of Congress are told of these unfunded liabilities, but they fail to talk about the problem or take action. Their periodic debt-ceiling dance ignores the problem by considering only bonded debt.
The debt ceiling should be modified to include total obligations, and the Treasury should begin explicitly keeping track of how much Washington really owes. Perhaps transparency will open congressional eyes. At the very least, it should alert voters to the frightening scope of federal largess so that we can hold Congress’s big spenders and benefit granters accountable.
Mr. Kolber is chairman of RESIDCO, a transportation equipment leasing company.
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Clearly, Congress has nothing resembling even an ‘inkling’ of a viable plan to get this debt monster back under control.
Shamefully, Washington Republicans who should some type of a vision for America, have no inclination to do anything, but ‘lightly tap the brakes’ on Democrat spending bonanzas.
And America remains headed for major U.S. Dollar instability and complete disorder in the credit markets.
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