What a nice surprise: According to commentators from all across the political spectrum, the national debt is "only" 10.5 trillion and not the 14.3 trillion that is currently the maximum allowed.
So what is congress and what are the rating agencies so worried about ? Government shutdown and default because we cannot borrow more than 14.3 trillion ? According to these specialists we have another 4 trillion to go before this dire outcome is to happen.
"The national debt has jumped to 69% of GDP this year, from 40% in 2008."
This is what Martin Feldstein wrote in an opinion piece in the Wall Street Journal today and its just an example of similar recent utterances.
What makes up the 4 trillion Dollar difference ? It's social security obligations, and it's only about 7% of the total estimated liability. It ended up on the US balance sheet because these are prior years surpluses that have been invested with the Treasury. What a fine investment when financial experts of all color can now claim it doesn't really exist ?
This surplus has been accumulated as the baby boomers entered their highest income years but are now beginning to retire and withdraw those same surpluses. Unless the government intends to stop Social Security, that surplus will have to be paid out over the course of the next 10 years and this "non-existing" debt will then be represented by publicly held Notes and Bonds.
Just 3 years ago, on July 24th, 2008, the debt limit was raised from 9.9 trillion to 10.7 trillion to have 800 billion available to bail out the mortgage insurers Fannie Mae and Freddie Mac. More than 4 trillion in additional debt in 3 years. Almost $30,000 for every taxpayer (140 million of them according to this source: http://www.taxfoundation.org/news/show/250.html)
Here's the link to the Feldstein piece :http://online.wsj.com/article/SB10001424052702303657404576363984173620692.html?KEYWORDS=martin+feldstein
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