How Much Washington Really Owes: $100 Trillion

Vince Kolber:

The issue arises from the way Treasury accounts for future spending that is required by law. It reports two separate figures, “net position” and “social insurance net expenditures,” but it doesn’t add them up into “total obligations,” and thereby deprives lawmakers and taxpayers of a full picture.

Net position is the difference between U.S. government “assets” and “total liabilities.” Importantly, total liabilities include only bonded debt—that is, U.S. Treasury bills, notes and bonds. Total liabilities were $34.8 trillion at the end of fiscal 2021. The Treasury reported assets at $4.9 trillion. Simple arithmetic brings us to the net position, negative $29.9 trillion.

But this accounting leaves a lot out. Social insurance net expenditures calculates the difference between the expected future liabilities of Social Security, Medicare, Medicaid and similar programs over the next 75 years and the income these programs are expected to generate during the same period under current law. The Treasury reported these unfunded liabilities at $71 trillion at the end of fiscal 2021.

That brings us to the alarming milestone. Add the net position of $29.9 trillion to the social insurance net expenditures of $71 trillion, and you find that they topped $100 trillion—the first time they have ever done so.

Government accounting specialists argue that the Treasury is right to keep these categories separate. They contend that social-insurance obligations aren’t truly debt because Congress has the power to curtail them by changing the law. But lawmakers have failed to do so for nearly 40 years and, until they do, the unfunded liability exists and is a present economic danger. By Treasury’s accounting, the amount these programs’ costs are expected to exceed their revenue is more than twice the net position—and the latter figure alone is what is commonly known as the national debt.