Tim Worstall

April 04, 2009

No doubt you thought that the announced deficit of $454.8 billion for 2008 was bad enough. As indeed I did, and no doubt we all share the opinion that an outstanding national debt of $5.8 trillion (note that that is 5.8 thousand billion, don’t let the new word disguise the difference in size there) held by the public is a great big scary number.

But those numbers are in fact much too small. Way, way too small. For if we actually accounted for government in the same way that a company has to account for itself then the Federal deficit in the year just closing was $3 trillion. Yes, that’s 3 thousand billion dollars. In fact, the deficit was larger than the entire Federal budget outlay as a result of promises that were made for spending in the future.

What’s worse is that far from the national debt being around $5 trillion, it’s more like $50 trillion on a proper accounting basis. That is, the U.S. Government has made promises to people in the future amounting to more than the entire global output of everything in a year.

To understand the details of all of this have a look here. Jim Scrivener writes this post about this time every year, just updating the numbers but leaving the argument the same. For the argument is the same every year, just the details of the numbers change. Sadly so, for both Jim and I would much prefer that the Federal Government stop promising us all into national bankruptcy.