Boston University economics professor Laurence J. Kotlikoff, who served as a senior economist on President Ronald Reagan's Council of Economic Advisers, says the U.S. debt totals $211 trillion, which is more than 15 times the official figure.
"We have all these unofficial debts that are massive compared to the official debt," Kotlikoff tells National Public Radio. "We're focused just on the official debt, so we're trying to balance the wrong books."
|Laurence J. Kotlikoff
(Boston University photo)
Kotlikoff explains that when America's "unofficial" payment obligations such as Social Security, Medicare and Medicaid benefits are included, the debt becomes almost exponentially greater.
"If you add up all the promises that have been made for spending obligations, including defense expenditures, and you subtract all the taxes that we expect to collect, the difference is $211 trillion,” says Kotlikoff, adding that politicians have chosen their language carefully to keep most of the problem off the books.
“That's our true indebtedness."
Kotlikoff notes that about 78 million baby boomers are poised to collect about $40,000 each in the next 15-20 years. “Multiply 78 million by $40,000 — you're talking about more than $3 trillion a year just to give to a portion of the population," he says.
"That's an enormous bill that's overhanging our heads, and Congress isn't focused on it. "Why are these guys thinking about balancing the budget?" he asks. "They should try and think about our long-term fiscal problems."
Reason.com reports that, according to a recent Reason-Rupe poll, 61 percent of Americans favor reforming Social Security and 59 percent favor reforming Medicare provided they are guaranteed to get back the money they contributed into the system.
© 2014 Moneynews. All rights reserved.