California economist says real US debt $70 trillion

Mitt Romney
Fox News: The federal government has been low-balling the public for years on how much debt it actually has, a University of California, San Diego economics professor  says, adding that the real amount is $70 trillion – not $16.9 trillion.
James Hamilton’s claim the United States is in a much deeper financial hole  than many realize comes as Congress gets ready for another budget battle when  lawmakers return in September. Both sides have been digging in on their policy  positions over the debt, spending and the country’s future fiscal health.
Hamilton believes the government is miscalculating what it owes by leaving  out certain unfunded liabilities that include government loan guarantees,  deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds. Factoring in those figures brings the total amount the government owes to a staggering $70 trillion, he says.
Hamilton believes important areas of federal off-balance-sheet commitments  include loans for post-high school education, the Federal Deposit Insurance  Corporation and the Federal Reserve System.
“The biggest off-balance-sheet liabilities come from recognition of the fiscal stress that will come in the form of an aging population and rising  medical expenditures,” Hamilton says, adding, “It is worth noting that there are many historical episodes in which off-balance sheet liabilities ended up having  quite significant on-balance sheet implications.”
For example, he says, fiscal problems stemming from the saving and loans  crisis from the 1980s. “Losses at these institutions ended up dwarfing the capabilities of the now-defunct Federal Savings and Loan Insurance Corporation to honor its promise  to guarantee depositors,” he says. The final on-balance-sheet cost to taxpayers honoring those guarantees came  out to $124 billion.
Hamilton isn’t the first economist to say the government understates how much  it owes. Claims that the real liability facing the government is $70  trillion date back several years.
David Walker, former U.S. Comptroller and CEO of the Comeback America  Initiative, made similar claims in 2012. Walker’s calculations include unfunded Social Security, Medicare and retiree pension promises.
Boston economists Laurence Kotlikoff and Scott Burns warned in a 2008 Forbes  article about what could happen if the government doesn’t curb its spending.
“The earthquake will come via a collapse in the market for U.S. government  bonds as domestic and foreign investors realize that the only way Uncle Sam can  meet his future spending obligations is to print massive quantities of money,”  they said. “The result will be sky-high inflation and interest rates and, most  surely, a prolonged reduction in output and employment. This could happen today.  It could happen tomorrow. But it will happen here just as it has happened in every other country that tried to spend far beyond its ability to pay.”
This isn’t surprising at all. And it’s not surprising that our politicians won’t do anything to get control of our debt. Sooner or later we must pay the piper.
DCG

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Dr. Eowyn
Admin
Dr. Eowyn
7 years ago

Thank you, DCG, for posting this. I’ve actually seen other estimates that are even higher than $70 trillion.

Dave
Editor
Dave
7 years ago

Actually, it’s probably around the $134 Trillion mark by now.
But at least they are getting closer.
-Dave

Laserboy
Laserboy
7 years ago

Those guys in Califoria are crazy. The government wouldn’t lie to us…………….Duh. Just because you’re crazy dosen’t mean you can’t be right!

japoa
7 years ago

Dave’s closer than people think .The Calif.economist forgot to mention the ” big 3″ , un-funded mandates of Medicare , Medicaid , and last but not least , Social Insecurity . That estimate is anywhere between 65 to 80 TRILLION bucks . What a rosy future we have !

Alice Wolf
Alice Wolf
7 years ago

Some of the supposed debt was pushed onto the US tax payer because the bankers take profits when their “investments” go well, but when they go bellyup they can look to the US citizens to take their losses, the money that the FED is printing goes to help the banksters out, and isn’t directed towards projects that would provide employment for our millions of unemployed citizens, which is what it legally is supposed to do. Why should the government force the citizens of the US to take on debts that are not theirs, and pay too much interest on the… Read more »

Alice Wolf
Alice Wolf
7 years ago

If we don’t pass Glass Steagall right away then the Bail Ins will start up just as they dd in Cyprus. Just as they’re beginning to realise that is creeping around the rest of the EU ex sovreign nations. We have to have sovreign currency to remain a sovreign nation, not borrow money from oligarchical monetarist banksters whose agenda is genocide and perpetual war if necessary. The trouble would soon stop if we were behaving as a sovreign republic instead of a deocracy or whatever people think we are, the democracy that is touted as being what is so desirable… Read more »

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[…] But the reality is the Federal Reserve is artificially suppressing interest rates because of the Godzilla-sized national debt of $16.9 trillion. That’s the official figure, according to our feral gummint. The real figure, according to a U.C. San Diego economics professor, is $70 trillion. […]