"The (national) debt really added up $75 trillion in 2010 and is on track to hit $99 trillion this year."
Scott Rigell on Friday, June 3rd, 2011 in a newsletter.
Rep. Scott Rigell says U.S. debt could hit $99 trillion this year
U.S. Rep. Scott Rigell issued a dire warning recently about the country’s fiscal problems.
"When $14.3 trillion is cited as the total of our national debt, that is only taking into account one part of the equation," Rigell, R-2nd, said in a June 3 newsletter e-mailed to constituents. "When the unfunded liabilities of mandatory entitlement spending are accounted for, the debt really added up to $75 trillion in 2010 and is on track to hit $99 trillion this year."
It’s widely known that last month, the U.S. government hit its $14.3 trillion "debt ceiling" -- the maximum amount it’s allowed to borrow without further congressional authorization.
But when you lump in entitlement spending, was the national debt really $75 trillion in 2010 -- more than five times the debt ceiling? Is the debt really on track to jump another $24 trillion by the end of 2011?
We decided to find out. First, we asked Rigell’s office where these colossal numbers came from.
Kim Mosser, Rigell’s communications director, pointed to an April slide-show presentation on the debt from the House Budget Committee. It included a graph detailing "unfunded promises." For 2010, the graph showed a tally of $76.4 trillion. For 2011, it showed a total of $99.4 trillion -- close to Rigell’s figures.
But exactly what costs are included in those numbers?
Conor Sweeney, the communications director for the Budget Committee, told us the figures come from reports by the Government Accountability Office on the nation’s fiscal outlook.
Looking at those studies, it’s clear the tallies Rigell cites are not, as he suggests, overall debt totals. They are complex and long-term projections used to estimate the 75-year costs of maintaining Social and Medicare under present-day conditions.
Technically, the numbers are GAO estimates of the amount of money needed to keep the level of publicly held debt at its present ratio of debt to gross domestic product for 75 years. The GAO calls it the "fiscal gap," a measure of the shortfall between revenues and spending promises for entitlement programs such as Social Security and Medicare.
For example, under one scenario, it would take $99.4 trillion in new revenues, measured in current-day dollars, to keep publicly-held debt 75 years from now at 62 percent of GDP -- its level at the beginning of 2011.
That money could come from higher taxes, decreased spending or a combination of both.
In a 2010 report, the GAO estimated it would take $76.4 trillion to keep publicly held debt at its January 2010 level of 53 percent of GDP.
But these are pessimistic projections of the nation’s long-term finances. The $99.4 trillion and $76.4 trillion figures arise from assumptions that most tax cuts will be extended for 10 years, discretionary spending will grow at the pace of GDP, and physician fees under Medicare will grow with inflation.
Under a moderate set of assumptions, the GAO projects the level of money needed to keep the publicly held debt level constant would be much lower -- $31.9 trillion would be needed to keep the debt 75 years from now at its January 2011 level.
Regardless of which scenario is used, the country needs to change its long-term fiscal trajectory, according to the GAO.
Rigell mischaracterizes the GAO’s numbers as total debt, when in reality they measure something different.
Let’s turn to another point. Rigell calls the projected shortfalls in funding entitlement programs for the next 75 years "unfunded liabilities." Many economists dispute that contention, noting that Congress is free at any time to reduce or alter the programs.
"Legally, they are not liabilities," said J.D. Foster, an economist with the right-leaning Heritage Foundation. "They can be referred to accurately as promises or obligations."
But Edward Mazur, a former member of the Federal Accounting Standards Advisory Board, said some social insurance programs should be counted as liabilities until the government alters the parameters of its promises.
Rigell said that the national debt was $75 trillion in 2010 and is projected to be $99 trillion in 2011 when unfunded entitlement costs are factored into the equation.
But his numbers are not based on actual totals of entitlement spending and the debt in any given year. His figures are based on pessimistic 75-year projections of what it would cost to continue entitlement programs under present-day conditions. A lot can change over 75 years.
Rigell is mischaracterizing the nation’s debt level.
We rate his claim False.