The WasteWatcher: The Staff Blog of Citizens Against Government Waste

National Debt Estimates Vary By Tens of Trillions

The WasteWatcher is the staff blog of Citizens Against Government Waste (CAGW) and the Council for Citizens Against Government Waste (CCAGW). For questions, contact blog@cagw.org.


Trying to figure out the exact size of the national debt is a more complicated question than one may think.  Many different components make up the national debt, which can vary the estimate by tens of trillions of dollars.  A February 24, 2013 Washington Post editorial identifies five different estimates for the current national debt, which vary based on which debt liabilities are counted towards the amount of total debt.  These five estimates, along with descriptive information on each, are listed below:

(1) Treasury debt held by the public: $11.3 trillion, 73 percent of GDP for fiscal 2012. This is the most common measure of the national debt. Reflecting past annual deficits, it represents what must be borrowed through sales of Treasury bills, notes and bonds. In 2007, the figures were only $5 trillion and 36 percent of GDP. Today’s levels — as a share of GDP — are the highest since World War II’s immediate aftermath. (2) Gross federal debt: $16 trillion for 2012, 103 percent of GDP. This definition includes the “debt held by the public” (above) plus the Treasury securities issued to government trust funds, the largest being Social Security. Economists dislike this debt concept, because the trust-fund Treasury securities represent one part of the government owing another. It’s comparable to lending yourself money. Congress could cancel these debts, though it almost certainly won’t. The trust-account Treasury securities represent political commitments more than financial obligations. (3) Federal loans and loan guarantees: $2.9 trillion in 2011, 19 percent of GDP. The government makes or guarantees loans to college students, farmers, veterans, small businesses and others. The face value of most of these loans don’t show up in the budget, but the government is on the hook if borrowers default. Adding this debt (19 percent of GDP) to gross federal debt produces a total debt ratio of 122 percent of GDP. (4) Fannie and Freddie: $5.1 trillion, 33 percent of GDP. The government wasn’t legally required to cover the debts of these “government sponsored enterprises” — the major lenders to the housing market — but almost everyone assumed it would if they got in trouble. That happened in September 2008. With Fannie and Freddie, the total debt ratio rises to 155 percent of GDP. (5) The Federal Deposit Insurance Corporation: $7.3 trillion, 47 percent of GDP. That’s the insurance protection on bank accounts up to $250,000. Including the FDIC brings the total debt ratio to 202 percent of GDP.

What is particularly disconcerting is that the most commonly cited estimate, the amount of debt held by the public, is the most conservative of all.  The most liberal estimate ($31 trillion) is roughly three times the size of that.  Although it is extreme to say that the all-inclusive $31 trillion estimate should be the universally cited figure for the national debt, it is essential that taxpayers are made aware that the proverbial rabbit hole goes much deeper than the low-ball national debt estimate often cited by the media and Obama Administration.

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