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The real cost of US debt

At least $8.3 trillion of the national debt is missing from the government’s books.

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President Obama’s National Commission on Fiscal Responsibility and Reform met for the first time recently to tackle the difficult task of reversing America's unsustainable fiscal path. Before we can understand how to tackle future debt, however, we need an honest estimate for the debts we’ve already incurred.

The current national debt estimate of $14 trillion is misleading. The government’s deceptive accounting practices fail to include its ownership in the automotive and financial sectors as part of the national debt, which would increase it by trillions of dollars.

It’s time for this administration to bring transparency to the federal budget process by properly accounting for companies now held by the federal government through the Troubled Asset Relief Program (TARP).

When Office of Management and Budget Director Peter Orszag ran the Congressional Budget Office, he unsuccessfully nudged the Bush administration to include the debt of federally backed mortgage enterprises Fannie Mae and Freddie Mac in the national budget. His position was that two principles of government accounting require such debts to be on the government’s books: principle one, we control these companies; principle two, we guarantee their debt.

The Obama administration disputes its control of TARP companies. But not only does the government tell GM what kind of cars to build and Citigroup which directors to elect, it also tells Fannie and Freddie which mortgages to subsidize. Principle one, check.

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