Overlooked Treasury Report supports warning about Federal Deficits sinking the U.S.

Pic.: ‘Tennessee Star’

James D. Agresti, the president of Just Facts and a policy advisor to The Heartland Institute, published a very interesting study in which he analyzes the volume and structure of the US debt. He gave a sensational figure for the US debt - 143 trillion dollars!!!

This is the financial threat that President Trump has faced, who is trying to pull money from all over the world - through tariffs, sanctions and duties. Trump has no choice but to attract dollars back to the US from all countries, primarily the rich countries of Europe. And this is a completely objective process, since otherwise the US debts can collapse their economy.

…Elon Musk stated that “rich people” should “be caring more” about federal deficits because “if the ship of America sinks,” “we all sink with it.” This may seem like hyperbole, but a widely overlooked report from the U.S. Treasury shows it is a likely scenario unless major changes are made.

The Treasury report, quietly released in January, shows that if the federal government reported its finances in the same manner that large corporations are required by law to report theirs, the primary measure of federal red ink wouldn’t be $36 trillion in national debt but $143 trillion in debts, liabilities, and unfunded obligations.

This staggering figure equals 85% of all the wealth Americans have accumulated since the nation’s founding. It also equates to an average burden of $1.1 million on every household in the nation.

Unlike other measures of federal finances that cover an arbitrary period, extend into the infinite future, or ignore government assets, the figure of $143 trillion applies strictly to Americans who are alive right now and accounts for the value of the government’s commercial assets. Thus, it quantifies the full federal financial burden on today’s Americans.

Although the Treasury published the report on January 16, Google indicates that no prominent politician or major media outlet has explicitly mentioned it. Meanwhile, the same people have frequently cited the national debt and federal deficit, which are incomplete measures of the federal government’s red ink.

The national debt and federal deficit are mainly based on cash accounting, which is the simplistic process of counting money as it flows in or out. Thus, liabilities like pension benefits for federal workers aren’t measured until they are actually paid, which is often decades after they are promised.

The Grand Total

A methodical tally of accrual accounting data in the Treasury report shows that the federal government has amassed $143 trillion in debts, liabilities, and unfunded obligations beyond the value of its commercial assets. This reflects the government’s finances at the close of its 2024 fiscal year on September 30, 2024.

The primary components of this burden, which are unpacked below, include:

• $28.3 trillion in publicly held national debt.
• $17.2 trillion in liabilities that are not accounted for in the publicly held debt.
• $105.8 trillion in unfunded social insurance obligations.

These figures tally to $151.3 trillion in debts, liabilities, and unfunded obligations. Offsetting this is $7.9 trillion in commercial assets owned by the federal government, leaving a grand total shortfall of $143 trillion.

Numbers in the trillions are hard to conceive, so it’s revealing to place them in context. The figure of $143 trillion amounts to 85% of the net wealth Americans have accumulated since the nation’s founding, estimated by the Federal Reserve to be $169 trillion. This includes all of their assets in savings, real estate, corporate stocks, private businesses, and even consumer durable goods like automobiles and furniture.

The government’s $143 trillion shortfall also amounts to:

• $421,108 for every person living in the U.S.
• $1,085,022 for every household in the U.S.
• 9 times annual U.S. economic output (GDP).
• 28 times annual federal revenues.

Publicly Held Debt

The simplest major item quantified by the Treasury report is the publicly held debt, which is $28.3 trillion. This is the money the federal government owes to non-federal entities like individuals, corporations, state governments, and foreign governments.

Publicly held debt is a partial measure of the national debt that excludes $7.1 trillion the federal government owes to federal programs like Social Security and Medicare.

Federal Assets

The Treasury also records the federal government’s commercial assets, such as:

$1.2 trillion in cash and other monetary assets.

$1.3 trillion in property, plants, and equipment.

$1.8 trillion in receivable loans, mainly comprised of student loans.

In total, the government estimated that it owned $5.7 trillion in commercial assets at the close of its 2024 fiscal year.

This figure is likely lower than reality because the Treasury report measures the value of the federal government’s:

• gold and silver according to laws that require it to assess gold at $42.22/ounce and silver at $1.29/ounce, which are small fractions of the market prices.
• property, plant, and equipment at the cost of purchasing these items and then depreciates them, which fails to account for inflation and the appreciation of assets like land.

Meanwhile, federal spending has soared from 3% of the U.S. economy in 1930 to 23% in 2023. Yet, a scientific survey commissioned in 2020 by Just Facts found that 25% of voters believe tax cuts were the main driver of debt. This accords with numerous news stories that blame the debt on tax cuts.

The same survey found that another 25% of voters believe the main driver of rising national debt is military spending. This conforms to the reporting of media outlets that frequently blame the debt on military spending. In reality, military spending has plummeted from 53% of all federal expenses in 1960 to 17% in 2023:

As shown in the charts above, the primary driver of the national debt is increased spending, particularly on social programs. These programs — which provide healthcare, income security, education, nutrition, housing, and cultural services — have grown from 21% of all federal spending in 1960 to 61% in 2023. Yet, only 39% of voters correctly identify social spending as the primary cause of rising debt.

In total, social programs and interest on the national debt — which mainly stems from social programs — account for 75% of all federal spending. Also, the vast bulk of the government’s unfunded obligations are due to Social Security and Medicare.

The Congressional Budget Office projects that the main drivers of future debt will be Social Security, Medicare, Medicaid, the Children’s Health Insurance Program, Obamacare, and interest on the national debt. Under the weight of these, the publicly held debt is due to skyrocket to unprecedented levels over coming decades.

Harmful Effects

The national debt doesn’t always manifest in the obvious fallouts of increased taxes or reduced government benefits. A broad range of academic publications document that the consequences of excessive government debt also include intensified inflation, lower wages, weak economic growth, and combinations of such results.

The linkage between those economic scourges and government debt are not always obvious to voters, and politicians who run up debt often blame “greed” for the harms that their deficit spending has caused. The media also promotes this false storyline. Hence, the harmful effects of government debt continue.

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