On July 22, the Congressional Budget Office’s (CBO) issued its latest long-term projections on the growth of the national debt. Astonishingly, as bad as the numbers issued by the CBO were, the debt crisis the nation faces is even worse than we are being told.
The CBO analysis does not take into account the full $14.344 trillion national debt, nor does it reflect the $430 billion in gross interest payments we are paying every year.
Instead it only considers the $9.7 trillion ‘debt held by the public’. That was cited by the CBO. What was not was the $4.6 trillion of debt owed to the Medicare and Social Security trust funds. Interest is owed to those programs similarly is not included.
Minor point of order - it is, after a fashion, accounted for. That intragovernmental debt is added when the "trust funds" cash out their Treasury securities on a net basis. The rationale behind that method is, unlike publicly-held securities, the special-issue ones the "trust funds" have don't need to be monetized when they mature.
ReplyDeleteOn the other hand, both the publicly-held debt and the total debt method of stating liabilities understate just how much conversion of the "trust funds" into cash will cost. Just looking at the SocSecurity "trust funds", my best estimate of how much cash it will take to get the present-value $2.6 trillion funds to technical exhaustion (DI in about 2016, OASI in 2035) is a bit over $7 trillion (in current dollars).