The size of the national debt of the United States should make you sick if you are a citizen. The mere idea that we could owe tens of trillions of dollars in debt is obscene, particularly when we consider the economic power of the country.
What makes it worse is the fact the national debt figure isn’t even accurate like so many government figures. How so? The government leaves out many of the items that it has guaranteed. These unfunded liabilities, such as Medicare obligations, amount to tens of trillions of dollars.
As bad as this is, there is one area that the government also fails to mention that is appalling. It equates to a $6.4 trillion obligation that nobody seems to mention. It is the guarantee the government has made on the GSEs.
What are GSEs? They are government sponsored enterprises. That term alone should put the fear of God in you. The government can barely run itself, so the idea it is sponsoring business entities is enough to make you want to close your eyes.
In this case, the GSEs are Fannie Mae, Freddie Mac and Sallie Mae. The first two are elephants in the mortgage market while the last one is a huge player in the student loan market. All three have huge problems.
As for Fannie Mae and Freddie Mac, I probably don’t need to say much. Both are the guarantors of various home loans. When the real estate market jumped off a cliff in 2008-9, the number of loans that went bad were nearly too many to count. Well, guess who guaranteed payment on the vast majority of those loans? Right – Freddie Mac and Fannie Mae. Now guess where they are looking for money to satisfy those guarantees? Yep, their sponsor – the federal government and you and me.
Sallie Mae isn’t in much better shape. As the economy went into a coma, the job situation became brutal. People who were working and paying their loans, lost their jobs and defaulted on their loans. Students coming out of college had no job prospects and thus no money to pay their loans. The numbers are growing every day as job growth remains elusive in the United States.
So, how much do we really owe on these three GSE’s? The figure as of 2011 is $6.4 trillion dollars according to CurrentUSANationalDebt.com. Will it go higher? Oh, yes. The housing market is still falling apart and the student loan default rate is only climbing. All and all, the situation is brutal and growing worse by the day.
So, now you know the truth. When you hear someone say the national debt is at some particularly amount, make sure to mentally add at least $6.4 trillion to that amount to get a more accurate figure. You might want to just add another trillion or two to make sure you aren’t understating things!
