National debt is larger, more subtle than thought
Letter

Agamitsudo / Wikimedia Commons

National Debt Clock in New York, New York on Mar. 4, 2011.

In his scholarly "A Short Primer on the National Debt" (op-ed, Aug. 29), John Steele Gordon gets most things right. Unfortunately, he (like many others) understates by a huge amount, the total federal government debt. To his proposed total of $14.6 trillion, to get to the real government debt, you have to add the federal "agency" debt of another $7.5 trillion, bringing the real total to $22.1 trillion. For this additional $7.5 trillion, the majority of which is the debt of Fannie Mae and Freddie Mac, the government is fully on the hook and cannot wriggle off without default. Agency debt, which over the last 40 years has grown from a relatively minor to a vast amount, was able to inflate so much because it is kept off the government's official books—hardly forthright bookkeeping. But although behind an accounting curtain, it is inescapably there and the taxpayers are committed to paying it. So, it's $22.1 trillion, even if we do not count, in agreement with Mr. Gordon, the unfunded "promises" of Social Security and Medicare.

Alex J. Pollock is a resident fellow at AEI.

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