And it's worse than you think...

So, since I started writing this blog, the debt clock has passed the eleven trillion mark. But here is the real shocker – our true debt is at least 53 trillion and will likely surpass 56 trillion before the end of this year! How is that, you may ask.

Well, remember – the 11 trillion is a combination of public debt and intragovernmental debt. Just to recap, public debt is the money the government owes to people, states, institutions, and foreign investors who hold United States treasury bonds, bills, and notes. (From now on, I will use the word “securities” to denote all types of investments.) Intragovernmental debt is what the government owes itself as a result of raiding the Social Security trust fund. That part is not included when the government tells us the current year’s deficit. It’s a very convenient way for politicians to cover up the true scope of their borrowing and spending. The kicker is, it will eventually have to be paid back when more people start drawing Social Security.

But that’s just part of it. The government has many other future obligations to be paid as well. For example, pensions for retired federal workers and military personnel. (Doug and I are owed some of that!) Then there are all the future Medicare pay-outs. That one is the true budget buster. Then you have to figure the effect of compounding interest on the growing deficit and bail-outs. Add it all up, and you get that 53 trillion in debt and future obligations. It’s mind-blowing.

Some people don’t worry about it too much. They point out that we can and will fix Social Security when we have to, and they believe the health care system will be reformed as well. As for the debt, we just keep rolling it over, never really needing to “pay it off.” As long as our economy grows, we will take in enough taxes to pay the interest on the debt. Of course, that has been the big worry recently – the economy has been shrinking instead of growing. Hopefully, that will turn around soon.

However, some pretty knowledgeable people believe our current situation is unsustainable. I’m afraid I agree with the pessimists.