Sunday, February 15, 2009

Ask and Ye shall recieve

Instapundit asks, "[I]s it really true that Federal obligations exceed world GDP? I don’t think it is. I certainly hope not."

Let's see what the US government has to say. The United States Treasury Department issues annual reports about the financial condition of the United States Federal government. A Citizen’s Guide to the 2008 Financial Report of the U.S. Government is a lengthy report that will give us part of the answer to Instapundit's question.

Now, I'm just looking for quick and dirty answers, so if you want to dive into the whole 206 pages for more accurate numbers, go right ahead. (Remember, this is only the "Citizen's Guide" as well, so the 206 pages merely represents a thumbnail summary of the situation. That fact by itself ought to make you queasy.) Page 17* gives us the following chart:



The Net Position (Assets Minus Liabilities) line represents our national debt as of Sept. 30, 2008. The Sustainability Measures section captures the expected future liability on items such as Social Security and Medicare for the next 75 years. Two categories are included. The Closed Group only considers people currently covered by the programs, and the Open Group which also includes future participants. The Open Group has a lower liability because many of those people will pay into those programs but won't receive benefits in that time frame. The Open Group is the more optimistic of the two estimates because it assumes we can continue to let new participants into the programs. Adding these two numbers gives a rough estimate of US Federal Obligations as of Sept 30, 2008.

Nation Debt ..................$10.2 trillion

Other Obligations ........$43.0 trillion

Total ..............................$53.2 trillion

These numbers do NOT include the TARP or the current stimulus package! Those won't appear on this report until next year's report.

Now for the world's GDP. I'm having trouble finding world GDP numbers for 2008. However the World Bank does give me numbers for 2007. According to this chart, world GDP in 2007 was $54.3 trillion. Assuming no growth in 2008, world GDP would slightly exceed us federal obligations. If one were to use the "pessimitic" number for US Other Obligations, that would add another $6.1 trillion dollars to the US total, easily pushing us past the world GDP number!

Given everything that has happened in the last four months, it is easy to believe that US federal obligations now exceed the world's annual GDP. Maybe I'll update this later with more accurate numbers, and maybe not. But the claim Instapundit wonders about is credible.

* Page 17 by the .pdf page count at the top; it's marked as page 10 on the print out.

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