Cox and Archer: Why $16 Trillion Only Hints at the True U.S. Debt - WSJ.com "For years, the government has gotten by without having to produce the kind of financial statements that are required of most significant for-profit and nonprofit enterprises. The US Treasury balance sheet does list liabilities such as Treasury debt issued to the public, federal employee pensions, and post-retirement health benefits. But it does not include the unfunded liabilities of Medicare, Social Security, and other outsized and very real obligations. As a result, fiscal policy discussions generally focus on current year budget deficits, the accumulated natnional debt, and the relationship between the two items and GDP. We most often hear about the alarming $15.96 trillion national debt (more than 100% of GDP), and the 2012 budget deficit of $1.1 trillion (6.97% of GDP). As dangerous as those numbers are, they do not begin to tell the story of the federal governemnts true liabilities. The actual liabilities of the federal government already exceed $86.8 trillion, or 550% of the GDP. For the year ending Dec. 31, 2011, teh annual accrued expense of Medicare and Social Security was $7 trillion. Nothing like that figure is used in calculating the deficit. In reality, the reported budget deficit is less than 1/5 of the more accurate figure. Some public officials and pundits claim we can dig our way out through tax increases on upper income earners, or even all taxpayers. In reality, that would amount to bailing out the Pacific Ocean with a teaspoon." Enjoy the bipartisan demagoguery regarding the "fiscal cliff", but now you know the truth. The US is in free fall over the cliff and has been for some time.