October 7th, 2008
03:37 PM ET

America's $53 trillion debt problem

[cnn-photo-caption image=http://i2.cdn.turner.com/cnn/2008/images/10/07/bernake.jpg caption="Fed Chairman Ben Bernanke on a television screen on the New York Stock Exchange trading floor." width=292 height=320]David M. Walker
President and CEO of the Peter G. Peterson Foundation

The Emergency Economic Stabilization Act contains plenty to make lawmakers on the left and right shudder. On the right, it's the apparent abandonment of free-market principles. On the left, it's the absence of punishment for high-flying Wall Street CEO's.

Looking down the middle, what I found downright unnerving was how hard Washington struggled to pass a bill that, in reality, represents less than 1 percent of our current federal financial hole.

Don't get me wrong. Congress and the Bush Administration are to be commended for acting to relieve the credit crunch and trying to minimize any immediate, adverse effect on our economy and by consequence, on American jobs and access to credit.

The ultimate cost of the act should ring up at less than $500 billion, less than the advertised $700 billion because of anticipated proceeds from the government's sale of the assets it will acquire with the appropriated funds.

The nation's real tab, on the other hand, amounted to $53 trillion as of the end of the last fiscal year. That was the sum of our public debt; accrued civilian and military retirement benefits; unfunded, promised Social Security and Medicare benefits; and other financial obligations - all according to the government's most recent financial statement of September 30, 2007.

The rescue package and other bailout efforts for Fannie Mae, Freddie Mac, AIG and the auto industry, escalating operating deficits, compounding interest and other factors are likely to boost the tab to $56 trillion or more by the end of this calendar year.

With numbers and trends like this, you might ask, "Who will bail out America?" The answer is, no one but us!

Since we're going to have to save ourselves, recent events could hardly be called encouraging. It took an additional $100 billion in incentives - some would call them "sweeteners;" others might call them bribes - to get lawmakers to pass the rescue package. Regardless of what you call these incentives, ultimately the taxpayers will have to pick up the tab, with interest.


Editor's Note: David M. Walker served as comptroller general of the United States and head of the Government Accountability Office (GAO) from 1998 to 2008. He is now president and CEO of the Peter G. Peterson Foundation.

Filed under: 360° Radar • Bailout Turmoil • Economy
soundoff (5 Responses)
  1. Jackie Green

    I'm not an economist but it seems like common sense to me that the high debt and deficit must have an impact on the financial crisis we're in. Can you help me understand if this is true, and how it all works together?

    October 7, 2008 at 4:09 pm |
  2. Henry

    Is this what you get when you listen to government financal advise?
    Why haven't they taken and used their own advise? 53 trillion dollar debt. That is a whole lot more then the 9 trillion dollar debt the media reported just a couple of years ago. Add to that the 700 billion dollar bailout on top of all the other bailouts that the government has done in just these past 5? years. So I think that 53 trillion dollar debt could very much be right on the mark, considering inflation and interest. Maybe we should've stayed on the gold stanard.

    October 7, 2008 at 4:09 pm |
  3. Barbara Wikle

    Hi Anderson,
    Palin is accusing Obama of being a terrist because of knowing Ayers.
    What does that say about the University he is working for?
    What does that say about all the students that have sat in and are sitting in his classroom?
    This comment goes way beyond accusing Obama of being a terrist and if I was the students and University!!!!

    October 7, 2008 at 4:07 pm |
  4. Surafel Melaku

    This is toooooooo much! 53 tri, i mean ... yup, let's move to China or India life is better there i guess!

    October 7, 2008 at 4:06 pm |
  5. Cindy

    Any such commission should, at a minimum, address the need for statutory budget controls, comprehensive Social Security reform, a first round of tax reform and a first round of comprehensive health care reform. It should hold hearings both inside and beyond the Beltway. And, its recommendations should be guaranteed to receive an up-or-down vote by Congress if a super-majority of the commission's members can agree on a comprehensive proposal.

    All of these things that were listed here is exactly what John McCain has been running on from day one. He plans to reform social security and health care, he wants to control our spending and to get the budget under control, and reform tax laws. He was also the one calling for commissions to overlook this whole deal and Obama scoffed at that and called him crazy! Who is crazy now Obama?


    October 7, 2008 at 3:47 pm |