How big is the federal deficit?
You may have heard that it's ten trillion dollars.
But some people are saying it's more than fifty trillion dollars.
Which side is right?
Both are right. Let me explain.
The current federal deficit is indeed 10.2 trillion dollars.That was the amount calculated on September 30th, the last day of the last federal fiscal year. It was published in a 254-page report issued just before Christmas that economists have just finished reading. But the report also calculates "future" debt.
The 50 trillion plus number, actually 51.3 three trillion - is arrived at by adding "future" debt, debt we don't carry now, but we know we face it because it includes promises the nation has made to its own citizens.
It's trillions that we expect to owe to veterans, and retirees, people in social security and Medicaid.
There are assumptions made to get these numbers. The numbers change if we raise taxes, or if older people live longer than we think they will. They change if the government breaks its promises, by changing the Medicaid rules, or raising the retirement age. But the general thrust of the report is that while the current debt is ten trillion, our known future indebtedness is perhaps five times that much. But I haven't even gotten to the worst part.
By far the biggest problem is, not spending, but interest on the debt, which is not merely rising rapidly but rising at any ever-accelerating rate.
Most economists, especially those who aren't tied to any of the various political factions, say the country will need to cut spending, raise taxes, run a surplus, and stimulate private sector hiring.
No one has ever managed to do all of those things at one time before.