A new study released on Monday found that the United States has accumulated an off-balance-sheet debt amounting to $70 trillion—over six times the debt amount declared by the federal government.
The study, which was conducted by University of California-San Diego professor James Hamilton and released by the National Bureau of Economic Research, looked at five categories of unreported federal liabilities, including government-funded support for “housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and other government trust funds.”
The U.S. federal debt skyrocketed after the 2008 economic crash, with the U.S. National Debt Clock placing the current debt at $16.8 trillion. Paying off the interest on the federal debt has become increasingly difficult, with taxpayers required to pay about $220 billion per year in interest alone.
But according to the recent study, these numbers are actually far larger than previously reported. The 2008 recession prompted the federal government to take out large loans from the U.S. Federal Reserve in an attempt to invigorate the rapidly sliding economy. Combined with shockingly high costs of Medicare and Social Security—which, according to the report, amounted to $27.6 trillion and $26.5 trillion, respectively—the federal debt is much higher than the government would suggest.
“These numbers are so huge it is hard even to discuss them in a coherent way,” said Hamilton in his report. “The U.S. population is aging, and an aging population means fewer people paying in and more people expecting benefits. This reality is unambiguously going to be a key constraint on the sustainability of fiscal policy for the United States.”
Along with Medicare and Social Security, the federal debt has suffered from the economy’s failure to produce new jobs for college graduates, which in turn makes it difficult for many college students to repay their federally funded loans.
Hamilton maintained that the $70 trillion in unreported debt found by the study does not necessarily point to economic disaster. According to the economist, it “may or may not translate into significant on-balance-sheet problems.”
“But one thing seems undeniable—they are huge,” he wrote. “And implicit or explicit commitments of such a huge size have the potential to have huge economic consequences, perhaps for the better, perhaps for the worse.”