The real American debt

For some people, America’s debt is at a reasonable level in relation to the situation in Europe. Comparing the debt of different countries in relation to their production of wealth can only be done using equivalent parameters. According to Maastricht criteria, the debt of European Union states covers the entire public sector within the meaning of national accounts: the state, central government bodies, local authorities and social security administrations. Let us transpose this definition to the administrative set-up in the United States.
In 2006, the fifty states and associated territories of the United States had a total debt of 2,200 billion dollars (1,683 billion euros) according to the Census Bureau, an agency that is part of the US Commerce Department and which is responsible for gathering US demographic and economic data. At the federal level, the state’s debt comprises the public debt and the debt from recent nationalisations. The public debt is itself composed of negotiable debt or debt held by the public and debt held by state institutions or intragovernmental holdings.
On April 9th, 2009, the share of the public debt held by the public was 6,893 billion
dollars (5,271 billion euros). To this should be added 4,277 billion dollars (3,270 billion euros) of non-negotiable debt, held by intragovernmental agencies managing the general retirement system (Social Security), a string of retirement schemes for federal government officials and the health insurance scheme for the elderly and the disabled (Medicare). The federal government “converts” surplus funds into non-negotiable Treasury Bills on the financial markets and the annual coupon is paid in Treasury Bonds. This picture therefore shows that taking only the negotiable part of the public
debt into account to compare US debt with that of European countries is purely and
simply a conjuring trick.