“…In a recent interview with Fortune, University of Pennsylvania economist Kent Smetters, who directs the Penn Wharton Budget Model, said the real debt picture looks very different.
“What we call implicit obligations are twice the size of explicit obligations,” Smetters said.Those implicit obligations are the promises buried inside programs like Social Security and Medicare.
If you count them, he argues, the real number is not $39 trillion.
It’s closer to $100 trillion.
And that’s coming from someone inside the system.
The reality is even worse.
The Official Debt Is Only the Tip of the Iceberg
The number politicians like to cite — roughly $39 trillion — is what economists call explicit debt.
That’s the money the federal government has legally borrowed through Treasury bonds and bills.
But the government has made massive promises it hasn’t funded.
These are called unfunded liabilities.
They include things like:
- Social Security benefits
- Medicare
- Veterans benefits
- Federal pensions
- Government healthcare commitments
These programs promise trillions in future payments with no money set aside to pay for them.
According to the Treasury’s own Financial Report of the United States Government, the 75-year unfunded shortfall is already over $73 trillion.
But that estimate only looks 75 years out.
Stretch the timeline further — which economists often do when measuring long-term obligations — and many fiscal analysts place the real number well above:
$200 trillion.
In other words, the $100 trillion estimate being discussed now may still be conservative. Boston University economist Laurence Kotlikoff, a former advisor to the Federal Reserve and the Treasury Department, has spent decades studying what he calls fiscal gap accounting.
His conclusion is far more alarming.
Kotlikoff has estimated the true long-term fiscal gap of the United States at roughly:
$220 trillion.
That figure represents the present value difference between all future government spending promises and expected revenue.
Kotlikoff has been blunt about what that means.
“The U.S. is bankrupt.”…”