Technically, and by the political definition, yes. It is the cumulative difference between actual revenues and spending. But by any reasonable accounting standard, our definition of national debt is hoax. More precisely, it is a political hoax within a hoax.
Almost two-thirds of the national debt is owed to us – mostly to our own government and its agencies. So when the pundits of doom talk about the impending explosion of interest on the national debt, one should smirk, a bit. We have systematically plundered Social Security, Civil Service and Military retirement funds (and other trusts) – like corporate America, we are never going to pay our pensions back, we’re going to change the rules. The Federal Reserve has purchased trillions of our national debt (quantitative easing) – in effect, it has already been paid by devaluing our currency. We have also allowed “banks” to go to the Fed money window for trillions of dollars at almost no cost that they have turned around and used to buy huge amounts of our debt making incredible profits – paying them back is little more than accounting.
Only about one-third of our national debt is owned by American and overseas investors. Were the Fed sponsored debt already paid with imaginary dollars subtracted from the $14 trillion, we owe far less than than the 76% to GDP ratio we hear so often. It would be more like 25% – an amount that would rank us among the most solvent countries in the world.
How did we get in this situation? You know. The Bush, now Obama, tax cuts for the rich when combined with the unfunded wars, the bailout of Wall Street and the stimulus bill, total almost all of it. To their credit, the Dems, in passing the “Affordable” Health Care Act and losing the mid-terms, will save a couple of trillion in the next decade, but we trillions on the table as bribes to health insurance companies and big pharma to get the bill passed. The surplus to debt happened in less than ten years. It could be undone in less than 151.
Except… for the non-debt debt – the elephant2 in the room – our unfunded liabilities. It would take, perhaps, $100 trillion to fully fund our pension and veterans obligations while continuing to fund Medicaid and other off-the-book obligations. A $38 billion cut, which almost forced a government shutdown, is stomping on ants while the elephants are jumping over the wall. Silly politics. Televised sport and nothing else. Look for the reruns to begin airing in a few days.
The only responsible way to address the real debt, is to get politicians out of our accounting and health care3. Treat Social Security, Disability and Medicare as tax financed programs – without a cap, not pretend trust funds. Require all tax cuts, breaks and subsidies have a sunset provision that forces a new and separate vote to continue. Stop treating earned and unearned income differently. Plug the loopholes. Send all corporate lobbyists to Guantanamo subject to military tribunals. Pass legislation limiting political contributions so they can only be made by individuals. Require competitive bidding for all government contracts. Give the states access to the Fed money window. Get out of the wars, slash the Pentagon, NSA/CIA budgets, require a two-thirds vote in Congress to wage war and support the UN to be the world’s peace keeper. Pass immigration reform to get the 20 million here undocumented, to pay legal taxes and Social Security and have access to better paying jobs. Create a Roosevelt-like works program that offers an alternative to long-term unemployment. Require two years of community or military service for our young people and offer college as a reward. Invest in a national system of medical clinics, private or public, to implement much of Medicaid. Do something. Don’t just cut something. The systems, political, economic and accounting, are unsustainable and broken.
1 By going back to historically low top rates, getting the hell out of the wars, requiring those too big to succeed without taxpayer funds to fail and getting people back to work. Duh.
2 Yes, it is ironic that the elephant is the symbol of the GOP.
3 I know, I know, I know, you are thinking, what the hell does he want to go and write about this for? Ignorance is bliss. Leave it to Nobel prize winning economists and people running for office to make this stuff up. Just couldn’t help myself.