A new study by University of California-San Diego economics professor James Hamilton finds that the United States has over $70 trillion in off-balance sheet liabilities–an amount nearly six times the on-balance-sheet debt figure.
The Treasury debt outstanding is $16.74 trillion. Of that, $4.84 trillion is money the U.S. owes itself. For that reason, explains Matt Phillips of Quartz, “many analysts tend to focus on the $11.91 trillion in debt that is publicly available to be traded.”
Hamilton’s study, however, examined the federal liabilities that are not included in the government’s officially reported numbers. Specifically, he examined the federal government’s “support for housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds.”
Not surprisingly, Hamilton found that Medicare and Social Security represent the bulk of future U.S. debt obligations, coming in at $27.6 trillion and $26.5 trillion respectively.
The study’s $70 trillion debt estimate may actually be overly optimistic. Boston University economics professor Laurence J. Kotlikoff, who served on President Ronald Reagan’s Council of Economic Advisers, says the nation’s true debt obligations are three times that figure.
“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 told National Public Radio. “That’s our true indebtedness.”
Hamilton concedes that other scholars may arrive at different figures.
“Some may argue that the current off-balance-sheet liabilities of the U.S. federal government are smaller than those tabulated here; others could arrive at larger numbers,” writes Hamilton. “But one thing seems undeniable—they are huge.”