U.S. unfunded liabilities really more than $200 trillion

U.S. unfunded liabilities really more than $200 trillion

debt, obama, Christo Komarnitski, cagle, Nov. 11, 2013In the past I’ve written here about the U.S. federal budget not being $17 trillion in the red, but more than $200 trillion (with a “t”). The calculations come not from some right-wing activist, but from Prof. Laurence Kotlikoff, a professor of economics at Boston University and a research associate at the  National Bureau of Economic Research.

This is important for California because something around half of the state budget — the total amount — comes from the federal government. When the feds begin cutting back spending sharply, as inevitably they will, then California will see sharp cuts in Medicaid/Medical, AFDC, SNAP/food stamps (more than the recent cuts), education/No Child Left Behind/Race to the Top, etc.

Kotlikoff recently was interviewed by Financial Sense Newshour. And Bob Wenzel provides a transcript of some of it:

Officially, the federal deficit is $17 trillion. Where is it really more than $205 trillion?


The liabilities the government owes are mostly off the books. We have a true debt picture which is about $205 trillion. This is recording all the future obligations the government has, whether they are official obligations or not, such as paying for your social security benefits, mine, or your mother’s Medicare benefits, defense spending, etc. All of these things are really obligations that aren’t recorded on the books as debt, whereas paying off future principal and interest payments on Treasury bills and bonds are recorded. So, anyway, if you take the value of all of those commitments and subtract all the taxes coming to pay those commitments, the difference is what’s called the fiscal gap; and that fiscal gap in the U.S. is now $205 trillion. So, the true debt is $205 trillion; the official debt is only $17 trillion. So, most of the problems we’re facing, most of the debt we have, the vast majority of it is off the books and Congress has done bookkeeping to make sure the public doesn’t see it.

Why is that not well known?


The Clinton administration—we put out the fiscal gap studies for a couple of years on the President’s budget. The Clinton administration then censored it. The guys who’s now head of the National Economic Council, the Chief Economic Advisor to President Obama, was the one who did the censorship back in 1994. President Bush’s Treasury Secretary O’Neil wanted us to do a fiscal gap accounting for the President’s budget in 2003 and he was fired in December 7, 2002, and that study was censored two days after he was fired. So, this is not accidental. This is more or less a conspiracy to hide the truth to keep ourselves and our kids in the dark about what the politicians are really doing, which is trying to garner the votes of older people and then get reelected and leave a bigger mess for our kids to handle.

But the bills are starting to come due as the Baby Boomers keep retiring.


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  1. LetitCollapse
    LetitCollapse 11 November, 2013, 16:10

    Yep. Most people either don’t know or just don’t care that most of the nation’s debts have been excluded from the balance sheets.

    What happens when the Fed can’t artificially suppress the interest rates @ 1-2% and they normalize to 7% (or higher). Do the math. Figure that by the end of Obama’s term (if we make it that far) the quoted Fed debt is north of $20T. How much would the debt service (interest payment) on the outstanding debt amount to? What percent of the federal budget would that consume? Is that sustainable? Do you think the Fed can keep the discount rates around 2% forever? What happens when the law of economics trumps human desire?

    You’ve got 47M on food stamps. Do you think they care about the debt? Nope. Not until they swipe the EBT card and it comes back ‘funds depleted’.

    Do you think the kids care? You know, the ones who are going to pay for the financial sins of their parents and grandparents? Nope. Not as long as they can put the latest iPhone on the plastic card and Uncle Sugar approves their student loans.

    The 60’s generation saw the body bags of friends and relatives coming home from Nam and didn’t want to end up in one themselves. So that generation stopped a war. The kids today don’t see what’s coming. They’re not paying attention. They don’t understand the warning signs. There are no body bags. When the hammer finally falls it’ll be like shock ‘n awe. And their parents and grandparents will say “Kids, we never saw it coming”.

    When the entitlements and the free stuff stops rolling in it ain’t going to be pretty.

    Reply this comment
  2. Queeg
    Queeg 11 November, 2013, 23:05


    LetItCollapse needs your positive vibes and encouragement.

    Never ever leave anyone behind when his House of Cards ” collapses”.

    Reply this comment
  3. LetitCollapse
    LetitCollapse 12 November, 2013, 11:03

    Moderator, if Mr. Queeg wants to offer a counterargument or discuss my opinion I invite him to do so. That’s what board discussions are all about. But Queeg seems to have a habit of directing personal comments at me to bait a confrontation. I would rather avoid that and focus on the subject matter at hand. Please remind him/her to focus on the topic and avoid making this personal so that we can keep it civil. Thanks.

    Reply this comment
    • The Ted Steele Conceptual Abstraction Unit
      The Ted Steele Conceptual Abstraction Unit 12 November, 2013, 15:26

      Wow Collapse– you have some thin skin little buddy. I think old Quueg is just using some apropo rhetorical blandishment is all.

      Reply this comment
      • LetitCollapse
        LetitCollapse 12 November, 2013, 18:18

        Queeg’s made it personal at least 3 times since I’ve visited this board. It’s best for him to direct his focus on the subject matter instead of on other posters so it doesn’t end up being a back and forth personal attack forum which tends to take focus away from the important stuff and ruin the quality of discussion boards. So it’s not about thin skin. It’s about maintaining civil dialog and sharing opinions on the interesting topics w/o running down the other poster. So sorry you see it that way.

        Reply this comment
        • The Ted
          The Ted 16 November, 2013, 21:40

          Let it collapse relax he is harmless, we all love your doomy nonsense out here

          Reply this comment
  4. Dyspetic
    Dyspetic 12 November, 2013, 11:28

    “When the feds begin cutting back spending sharply, as inevitably they will,”

    Have to disagree with you on that John. The Feds will not cut back on spending in any serious way. The Ivy League intellectuals and Big Business oligarchs’s who run the country are mostly doctrinaire Neo-Keynesian’s. They absolutely believe that the ‘G’ variable in the GDP formula is indispensable and must continue at current or higher levels. They also believe that the national debt doesn’t matter because, to quote Prof. Abba Lerner “We only owe it to ourselves”.

    Influential economists like Paul Krugman and Brad DeLong are still calling for massively greater government spending justified by the notion that the nations economy is smaller than their “potential GDP” calculations say it should be.

    Never forget that the primary reason that the Federal Reserve System exists is to be lender of last resort to a profligate Federal Welfare/Warfare State. If The Fed needs to increase QE to $500 billion per month to keep the whole fiasco afloat, then they will, and fear of hyperinflation won’t stop them.

    Fiscal and monetary stimulus are the only things keeping our zombie economy running in fake prosperity mode. Just a rumor of QE taper causes the stock market to tank and interest rates to spike upward. Remove either QE or massive Federal deficit spending and the economy collapses like house of cards.

    The real danger isn’t that the Feds will cut back sharply on spending but that the central bank will continue to monetize the insurmountable debt and thereby ultimately destroy the value of the nations currency.

    Reply this comment
    • John Seiler
      John Seiler Author 12 November, 2013, 12:55

      “The real danger isn’t that the Feds will cut back sharply on spending but that the central bank will continue to monetize the insurmountable debt and thereby ultimately destroy the value of the nations currency.”

      Same thing.

      Reply this comment
      • Rex the Wonderdog!
        Rex the Wonderdog! 13 November, 2013, 08:31

        “The real danger isn’t that the Feds will cut back sharply on spending but that the central bank will continue to monetize the insurmountable debt and thereby ultimately destroy the value of the nations currency.”

        Children, I hate to break the bad news to you, but our currency is already gone, destroyed, poof.

        Ronnie Raygun started the twin deficits (budget and trade) in 1980 when he became president, and every dem and repug since has followed in his footsteps. In 1980 America was the LARGEST CREDITOR nation in the WORLD, we had NO real budget deficit (as in less than 1% of GDP). After 2 years of Ronnie Raygun deficit spending building the biggest military in the world by a factor of 5, we were the largest DEBTOR NATION in the world.

        Then came Bush- same old same old. Then came Clinton- same old same old. Then came Bush Junior- same old same old. Then came Obama- same old same old. That says it all right there folks. And we started outsourcing ALL of our manufacturing jobs to Mexico, India, China and everywhere else you can pay a worker $3 a day while dumping toxic chemicals all over the land.

        Reply this comment
  5. LetitCollapse
    LetitCollapse 12 November, 2013, 14:44

    “If The Fed needs to increase QE to $500 billion per month to keep the whole fiasco afloat, then they will, and fear of hyperinflation won’t stop them”

    Dys, I have to agree and disagree with you here.

    I agree that the Fed will continue to pump fiat dollars into the bankrupted system to keep the corporate pigs and government from going belly up for as long as possible, just like they’ve done since 2008. Btw, I don’t label it “bailouts” or “QE” like most people do. I cut to the chase and call it what it is: Theft.

    OTOH, I disagree with you about how long that game gets played. You seem to opine it continues indefintely as hyperinflation rears it’s ugly head. I contend that world history has proven to us repeatedly that the ‘theft’ card gets played only for a limited time before it finally destroys the fiancial system and the government that played it.

    Both of us should defer to world history on whether or not that game can continue indefinitely. World history is the expert on that. But it certainly is up for argument how long it will take before it comes to an end. This is always a fun discussion.

    The great historian and philosopher, Will Durant, once said:

    “Most of us spend too much time on the last twenty-four hours and too little on the last six thousand years.”

    Reply this comment
  6. Donkey
    Donkey 12 November, 2013, 16:27

    California’s “off the books” debt is more than two trillion dollars, but no one seems to want to talk about it either!! 🙂

    Reply this comment
  7. Rex the Wonderdog!
    Rex the Wonderdog! 13 November, 2013, 08:32

    Hi Donk!!!!!!

    Reply this comment
  8. Chuck Barnes
    Chuck Barnes 17 April, 2014, 01:37

    America will start with nickel and dime austerity and or default cuts in spending until America revolts and or we lose the reserve currency and
    learn from history that no nation lasts forever with a fiat currency along with hyperinflation followed by depression and America pays back for the excesses of the past. Spend baby spend America until God deals with a sick
    nation. God Bless America? Yes but do we deserve a blessing when congress can’t do or start what is necessary to stop a ship from sinking. Let us face the truth and realize that America can’t buy and spend our way out of this debt. Lost hope in that. Semper-Fi from a old Marine who lost his best friend and brother KIA to save our nation.

    Reply this comment
  9. Chuck Barnes
    Chuck Barnes 17 April, 2014, 01:44

    Trust in The Lord Jesus. He is in control of the future now and always. I will never lose faith in Jesus for ” all things are possible with God.” We
    do have hope … Praise The Lord America.

    Reply this comment
  10. Frank steele
    Frank steele 29 November, 2014, 09:05

    They have been able to artificially lower rates for a long time….who is to say they can’t do it for another 10 years?

    Reply this comment

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