Has the Government Been Low-Balling National Debt Figures?

How much outstanding debt does the United States actually have? James Hamilton, an economics professor at the University of California-San Diego believes the true amount is not the $17 trillion number frequently used, but rather a much larger $70 trillion.


Hamilton recently released a study examining liabilities not included in standard debt calculations which Brietbart.com lists as "support for housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds.”

“With the federal government today being the sole owner of Fannie and Freddie, it seems appropriate to consider both the direct debt obligations as well as their outstanding mortgage guarantees [which are now treated] as an off-balance sheet liability,” Hamilton stated according to DigitalJounal.com.

Hamilton's calculations also included Medicare and Medicaid as part of the debt obligations. Those two programs alone accounted for $54.1 trillion of the total estimated debt.

As shocking as Hamilton's estimate is, Boston University economics professor Laurence J. Kotlikoff believes it is still too low.

"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 NPR in a 2011 interview. "That's our true indebtedness."

Whether the true number is $17 trillion, $70 trillion or $211 trillion, how can the government eliminate the fiscal gap?

According to Kotlikoff, the solution is either higher taxes or spending cuts well beyond what lawmakers have expressed a willingness to undertake.

"What you have to do is either immediately and permanently raise taxes by about two-thirds, or immediately and permanently cut every dollar of spending by 40 percent forever," he said. "The [Congressional Budget Office's] numbers say we have an absolutely enormous problem facing us."

How concerned are you about the national debt? Would you support massive tax increases or large spending cuts to eliminate the debt? Let us know in the comments.