U.S. Off-Balance-Sheet Liabilities [CHART]

U.S. Off-Balance-Sheet Liabilities [CHART]

This post first appeared on FloatingPath

The official U.S. debt totals are just one part of a more complex web of accounting rigmarole, and while we’ve recently seen there are other ways to look at U.S. debt levels, here we can see more specifically how significant all of the off-balance-sheet U.S. liabilities really are. Time and again we hear figures of the nation’s debt tossed around, and they typically hover around $16 trillion. However, according to a paper from James Hamilton and the National Bureau of Economic Research, it’s apparent that those numbers are more along the line of $70 trillion.

“These numbers are so huge it is hard even to discuss them in a coherent way,” he [Hamilton] said before providing a caveat on the US demographic situation. “The US population is aging, and an aging population means fewer people paying in and more people expecting benefits. This reality is unambiguously going to be a key constraint on the sustainability of fiscal policy for the United States.

“One would think we should be saving as a nation today as preparation for retirement, and if in fact we are not, the current enormous on-balance-sheet federal debt is all the more of a concern.”

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With a real debt level of $70 trillion, an economy stuck in neutral, and an aging population it would seem as though the picture could not get much bleaker. However according to Laurence J. Kotlikoff, an economics professor and former member of Reagan’s Council of Economic Advisers, the numbers can get worse if you look very long term.

“If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion. That’s the fiscal gap,” Kotlikoff said in an interview with National Public Radio. ”That’s our true indebtedness.” 

Fortunately for our politicians and quite unfortunately for future generations, law makers in Washington are completely unable to look very long term. So while legislators keep their head in the sand, these numbers will continue to grow larger and America will continue to lose its competitive edge.

Tables via Off-Balance-Sheet Federal Liabilities, all numbers in billions:

U.S. Off-Balance-Sheet Liabilities [CHART]

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