At nearly $13 trillion, with much of that owned to foreign governments, the national debt is completely unsustainable, however, according to CNNMoney.com, due to budgetary tricks and gimmicks, America’s fiscal situation may be much worse than the general public even realizes.
One of the nation’s biggest expenditures left unaccounted for are the unfunded obligations to Social Security and Medicare. By 2037, the Social Security trust fund, which has been raided numerous times over the years to pay for other programs, is expected to only be able to cover a portion of the promised benefits. That could happen to Medicare as early as 2017.
The cost of losses that government-owned mortgage giants Fannie Mae and Freddie Mac are piling up are not accounted for either. As government-sponsored entities, the federal government is obligated to cover the costs of the companies losses, to a certain point. The nonpartisan Congressional Budget Office has estimated that those losses could total $370 billion by 2020.
Recent changes to regulations have allowed citizens to move their money from a 401(k) account into a Roth IRA tax-free. Although this will have little effect in the short-term, over time it could cost the government billions in tax revenues.
This would simply add to the nearly $1 trillion in tax breaks each year. Those tax breaks work like a hidden expenditure because it simply results in the government borrowing an additional $1 trillion each year to cover the gap.
Some have actually argued that America’s debt is not a problem. Recently, former Federal Reserve Chairman Alan Greenspan made that claim, and was roundly criticized by Secretary of State Hillary Clinton, who said that the nation’s debt was not only an economic issue, but a national security issue as well.
"We have to address this deficit and the debt of the United States as a matter of national security not only as a matter of economics," she said, according to ABC News.
Recently, Japan surpassed China to become the top holder of American debt. However, reliance on the goodwill of foreign governments is never a wholly safe proposition.
The federal government has at least begun to take the issue seriously - sort of. In a classic Washington ploy, instead of lawmakers standing up and taking on a tough issue, they have passed it off to a commission. The National Commission on Fiscal Responsibility and Reform, created by the president, is charged with coming up with solutions to balance the budget by 2015, which will likely include politically unpopular tax increases and entitlements cuts.