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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About the Author

 

Alex J.
Pollock
  • Alex J. Pollock is a resident fellow at the American Enterprise Institute (AEI), where he studies and writes about housing finance; government-sponsored enterprises, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks; retirement finance; and banking and central banks. He also works on corporate governance and accounting standards issues.


    Pollock has had a 35-year career in banking and was president and CEO of the Federal Home Loan Bank of Chicago for more than 12 years immediately before joining AEI. A prolific writer, he has written numerous articles on financial systems and is the author of the book “Boom and Bust: Financial Cycles and Human Prosperity” (AEI Press, 2011). He has also created a one-page mortgage form to help borrowers understand their mortgage obligations.


    The lead director of CME Group, Pollock is also a director of the Great Lakes Higher Education Corporation and the chairman of the board of the Great Books Foundation. He is a past president of the International Union for Housing Finance.


    He has an M.P.A. in international relations from Princeton University, an M.A. in philosophy from the University of Chicago, and a B.A. from Williams College.


  • Phone: 202.862.7190
    Email: apollock@aei.org
  • Assistant Info

    Name: Emily Rapp
    Phone: (202) 419-5212
    Email: emily.rapp@aei.org

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