On July 22, the Congressional Budget Office’s (CBO) issued its latest long-term projections on the growth of the national debt. Astonishingly, as bad as the numbers issued by the CBO were, the debt crisis the nation faces is even worse than we are being told.
The CBO analysis does not take into account the full $14.344 trillion national debt, nor does it reflect the $430 billion in gross interest payments we are paying every year.
Instead it only considers the $9.7 trillion ‘debt held by the public’. That was cited by the CBO. What was not was the $4.6 trillion of debt owed to the Medicare and Social Security trust funds. Interest is owed to those programs similarly is not included.
These are real liabilities that the American people are expected to honor, and do honor under CBO’s analysis. But because they are not revealed until 2024 and 2036, when the trust funds are fully exhausted, even the dire scenarios that are presented to the American people are actually rosy.
Why would the CBO leave this out of their analysis? Ostensibly, economists would counter that it’s just money owed to ourselves, and not a share of debt held publicly. That, those obligations might be repudiated. So they shouldn’t be counted until they come due.
In reality, it’s just an accounting gimmick that hides that allows the government to understate the dire fiscal condition the Treasury really is in. When the Medicare and Social Security trust funds are exhausted in 2024 and 2036, respectively, the Treasury will be forced to borrow more money publicly anyway to honor the obligations to those programs.
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