Today, intragovernmental debt exceeds $4.6 trillion. This is essentially debt that the federal government owes to itself, such as debt it owes to the so-called Social Security Trust Fund. The good news here is that intragovernmental debt is not projected to grow much in the future. The bad news is that that is because both Social Security and Medicare are already running deficits — there’s nothing left to steal.
As if that’s not enough, there is also a third category of government debt: “implicit debt.” This represents the unfunded obligations of programs such as Social Security and Medicare — the amount that those programs owe in benefits in excess of the amount of taxes that they expect to take in. Think of it as bills you know are going to come in next month but haven’t been delivered yet.
According to the annual report of the Social Security system’s trustees, that program’s unfunded liabilities now exceed $18 trillion. Medicare is in even worse shape. The most recent estimate of its finances, also released this week, warns that Medicare owes $36.8 trillion more in benefits that it is expected to be able to pay for. And that is the optimistic outlook: It assumes that all the projected savings from President Obama’s health care reform actually happen as promised, something that even Medicare’s own actuaries are deeply skeptical of. If those savings don’t materialize, Medicare’s debt could actually top $90 trillion!
Add it all up, and total US debt actually exceeds 900% of GDP. That’s somewhere in excess of $120 trillion. We are beginning to talk real money here.