According to a professor of economics in San Diego, the read debt being held by the United States is closer to $70 trillion, not $16.9 million.
The professor, James Hamilton, claims that the United States is in much deeper trouble and a more dire situation than many seem to realize. While Congress prepares for another budget battle, lawmakers return in September with a looming debt ceiling over their head. Both sides have been digging in regarding policy positions over debt, spending, and general financial futures.
Hamilton says that the government is now miscalculating what it owes to unfunded liabilities that include, but are not limited to, government loan guarantees, deposit insurance, as well as actions taken by the Fed itself. Also added in is the cost of other government trust funds. Factoring in such figures, the total comes out to be far beyond the $17 trillion, and instead shows a number closer to $70 trillion, says Hamilton.
The professor believes that the federal off-balance-sheet commitments include the post-high school education, Federal Deposit Insurance Corporations, and other Federal Reserve System.
“The biggest off-balance-sheet liabilities come from recognition of the fiscal stress that will come in the form of an aging population and rising medical expenditures,” Hamilton says, adding, “It is worth noting that there are many historical episodes in which off-balance sheet liabilities ended up having quite significant on-balance sheet implications.”
One example was the fiscal problems stemming from the savings and loan crisis in 1980. “Losses at these institutions ended up dwarfing the capabilities of the now-defunct Federal Savings and Loan Insurance Corporation to honor its promise to guarantee depositors,” he says.
Hamilton is far from the first to say the government owes more than it will admit. Claims that are $70 trillion marker is the true number stems back a few years. Former U.S. Comptroller David Walker made a similar claim. In 2008, Boston economist Laurence Kotlikoff and Scott Burns wrote an article on the debt problem.
“The earthquake will come via a collapse in the market for U.S. government bonds as domestic and foreign investors realize that the only way Uncle Sam can meet his future spending obligations is to print massive quantities of money,” they said. “The result will be sky-high inflation and interest rates and, most surely, a prolonged reduction in output and employment. This could happen today. It could happen tomorrow. But it will happen here just as it has happened in every other country that tried to spend far beyond its ability to pay.”
Fix the Debt (http://www.youtube.com/watch?v=fKsW-CHhHQk&list=PL5D14FDFFD9281849&index=18) provides visitors with information on how they can join the cause of mending the debt that plagues the United States. Learn what you can do and how to join the cause to turn around the negative effects of the ever-rising national debt.
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