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The Forgotten Debt

May 20, 2010

Sandwiched between our financial meltdown, Obama's presidential election, and the crisis in Greece, another, equally important story has flown under the radar.  With the rise of the 24-hour news cycle, modern news coverage should ensure that events of national importance receive the coverage that they deserve. 

When we look at the coverage of government debt, not only the media, but also the government fails to reveal the whole story.  We are bombarded with a litany of stories about the federal budget deficit and the national debt, but the attention given to the debt issue is not the problem. The point is not the media's failure to mention the topic of federal debt, but rather it's the substance of the coverage that is lacking – specifically the way the amount of debt is calculated.  It's a far larger problem than a mere matter of incorrect addition.  You can find the problem with every garbage pick-up man, mayor, city official, and governor across our nation.  How is this possible?  It stems from the debt carried by state and local governments, and it just might be the straw that breaks the camel's back.

State and local debt is not calculated as part of the national debt.  This egregious error demonstrates that the media and the government do not offer the American public an accurate depiction of the severity of the country's debt obligations.  The federal system of government is, by definition, a combination of national and state governments. So then, by extension, government/national (take your pick of words) debt should be viewed as a compilation of federal and state debt

This technicality might not be as big of an issue if the difference between the two numbers was inconsequential.  However, that is not the case.  So, exactly how big is the difference? Approximately $2.3 trillion.  That's right, state and local governments across the country have amassed $2.3 trillion in debt.  Add that figure to the nearly $13 trillion the national government owes, and we are talking about a staggering $15.3 trillion in combined government debt. 

Recently, Paul Krugman wrote an op-ed in The New York Times arguing that the United States' financial situation is not comparable to Greece's.  On this point, he is correct.  The United States is not Greece; instead, we are toast – blackened, burnt toast – and with the current trends of increased government spending, the oven is just beginning to heat up.  At least Greece is small enough to bail out; here in the United States, we don't have that option.  If we go up in flames, there will be no one left to put out the fire.  

Burnt toast aside, our government's debt level is unsustainable and extremely alarming. Regretfully, with an additional $2.3 trillion added in, a far more formidable debt faces our nation. That's why we need concerned citizens to tell Washington (and Sacramento, Tallahassee, Phoenix, and Baton Rouge) to stop writing checks that we can't cash.  


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