US Debt Level Explained
Robert J. Samuelson (my favorite economist and economic editorial writer) had an interesting and informative editorial commentary on February 25, 2013 about the US Debt and the complexity in counting it up. He notes that there are 5 different figures that a reasonable person could use in establishing the level of the US debt depending on what was included. The five are as follows:
Category Amount FY2012 % of GDP
1. Treasury Debt Held by the Public $11.3 Trillion 73%
2. Gross Treasury Debt $16.0 Trillion 103%
3. Gross Treasury Debt $18.9 Trillion 122%
plus federal loans or guarantees to others
4. Category 3 plus Housing Debt $24.0 Trillion 155%
5. Category 4 plus FDIC $31.3 Trillion 202%
Not counted are the Medicare, Social Security, Medicaid, and other liabilities which are not debts but future liabilities that are subject to change by the acts of Congress. In an accounting sense, the management of the Federal Government (the President and his Chief Financial Officer) may choose to book these on their financial statements or only in the footnotes to those financial statements. The audit opinion on the US Federal Government given by their outside auditors will depend on their choice in this matter.
Remember Reinhart and Rogoff and their economic analysis. When debt exceeds 90% of GDP, growth is slowed. Clearly on 4 of the 5 measures of debt, we exceed this slow growth cutoff. Perhaps this, in part, explains our slow expansion since our major recession in 2008.
