Wednesday, August 14, 2013

California Economist Says Real U.S Debt $70 Trillion, Not $16.9 Trillion the Government Claims

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, James Hamilton says, adding that the real amount is $70 trillion – not $16.9 trillion, according to FOX News.

Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, actions taken by the Federal Reserve as well as the cost of other government trust funds. Factoring in those numbers brings the total amount the government owes to a staggering $70 trillion, he says.
According to FOX, 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.”


  1. Good points. However, I can find about 15 trillion in off balance sheet debt. I'd like to see his debts line item-ed so that I could peruse or verify them.

  2. This is just more bad math.Guarantees are potential liabilities, not comparable to a govt bond. Doubt every bank will fail and every student loan will default. Tossing in FDIC and student loans is done to inflate the number to make it scary. Dishonest.

    1. So why do they leave it out then? If i was applying for a loan, I suspect the lender would want to know what i was on the hook for? so why is the government which is meant to to for the people allowed to slip off?

      and if you think $70t is bad, try swallowing $229t.

    2. Your point is a valid one Jerry, but so is Heath's. There is no reason the government shouldn't report potential liabilities, making it clearer that if things go seriously south and a large number of people default on guaranteed loans, the taxpayers will be on the hook for a sizeable chunk of change. The government is at least (in my opinion more) as dishonest as you claim this professor to be.

    3. As Heath points out, if they were to add in every nickel of liabilities, the debt would equal $222 Trillion. But as an economist what Hamilton did was factor in likely defaults on those liabilities that came to $70 Trillion. Formulas do exist to come to these conclusions, some economists have pegged it at $87, and some have it closer to $60 Trillion. The point is that it is much larger than the $16 Trillion currently reported. And as Heath states, when you go get a loan, the bank will take in consideration any loans outstanding you have, even if you are only the co-signatory, similar to Government loan guarantees. Hamilton's analysis seems legitimate.

  3. Bigger is our distance from the exact figure, more rooms we create for potential financial confusion or overspending. Thanks for the article and discussions. I agree.

  4. "According to Fox News."

    There's a credible source. LOL