Real Balance Sheet of the U.S. Government
Has anyone ever looked at the balance sheet of the U.S. Government? Check it out here, click on “Financial Statements” and go to page 11 of the document. I'll summarize it quickly*:
Assets: $2.7 trillion
Liabilities: $70.6 trillion
Net Worth: -$68 trillion
Breakdown of Liabilities
Balance sheet liabilities (incl. debt): $14.1 trillion
Present Value of Social Security, Medicare etc.: $52.1 trillion
Intergovernmental debt: $4.4 trillion
Obviously the U.S. is a not-for-profit entity, but this is taking it a bit far! If the government was a corporation it would clearly be bankrupt because lenders would cut it off. The only thing that keeps it afloat is purchases of our debt by foreigners and the Federal Reserve (more on this in a future post). Our size is a big factor too – everyone has a stake in the U.S. and stands to lose if we hit financial trouble. But this doesn’t mean the current state of affairs will last forever. How and when will this house of cards unravel? This year? Next year? In 5 or 10 years?
* Healthcare and intergovernmental debt isn't on the official balance sheet but I have put it there because that's where it belongs.