Congress and President Biden are currently pretending to debate whether or not to raise the so-called debt ceiling from its current legal level, which is $31.4 trillion.
To hear both sides talking, you’d think this was some kind of debate about whether to raise the U.S. national debt above…er…“$31.4 trillion.”
U.S. debt soared way beyond that level years ago. It’s not even close to the numbers that the D.C. insiders are talking about. If the true U.S. national debt could be brought down to a mere $31.4 trillion, policy makers across the aisle would probably fall to their knees and begin weeping tears of joy.
And I’m not even talking about whatever extra the government has had to borrow on the QT since it sailed through the legal debt ceiling in January. (For the daily juggling of accounts, you can follow the details here.)
First there is the extra $22.4 trillion that the federal government owes via the Social Security trust fund. That’s according to the trustees themselves, and it has risen more than $2 trillion, or about 10%, just in the past year.
That, incidentally, only refers to the present value in today’s money of the unfunded liability over the next 75 years.
To give you an idea of how far the farce goes, the White House Office of Management and Budget refers to this as “Off-Budget” in the documents on its website.
This falls into the same rhetorical trap as Ronald Reagan in the 1984 presidential debates, when he effectively pretended that the Social Security trust fund and the U.S. government’s accounts were completely separate entities in practice as well as in law.
It’s a shell game. Among the many, many ways in which the two are intertwined is that the federal government has been using the Social Security trust fund as a piggy bank since it was first created in the 1930s. That’s why Social Security, almost alone out of all the pension funds in America or around the world, is required to pour all our money into bonds issued by the federal government. The returns are lousy. But when Uncle Sam has to borrow another trillion dollars, who do you think he borrows it from?
We’re not even finished with the debts.
Then you have to add the $4.4 trillion that the federal government owes through the Medicare trust fund. That’s also a figure for 75 years.
Then there is the massive, underfunded and undercounted public pension debts owed by the various U.S. states, cities and towns. Current value: Another $1.5 trillion, according to the latest numbers from the Equable Institute think-tank. Legally, those are not the direct liabilities of the federal government. But politically and practically they will be.
If you add all this to the debt ceiling currently under debate, it brings the total to about $60 trillion. Which would suggest the total U.S. national obligations are about twice the headline figure currently being discussed. They’re also more than twice gross national product, which the CBO estimates is around $26 trillion.
But sure, let’s pretend it’s only $31.4 trillion in front of the cameras.
Nearly $5 trillion of the (official, headline) debt is due to one thing: The massive amounts that the federal government borrowed and spent to bail out the U.S. economy while locking it down in 2020 and 2021 during Covid.
And $3 trillion of that, voted on during 2020, was supported almost unanimously by both parties in Congress. For instance the March, 2020 emergency CARES Act, which alone added an estimated $1.7 trillion to the national debt, was passed by the House of Representatives by 419 votes to 6 and by the Senate by 96 votes to 0.
So it’s a little late in the day to be complaining about the national debt.