Columnist Susan Snyder: Taking a swim in the red sea

Friday, Aug. 13, 2004 | 5:01 a.m.

Susan Snyder's column appears Mondays, Tuesdays, Fridays and Sundays. Reach her at snyder@lasvegassun.com or (702) 259-4082.

WEEKEND EDITION

August 14 - 15, 2004

The picture painted by a recent U.S. Government Accountability Office report shows that the guy playing the video poker machine down at the 7-Eleven probably has a better chance of financial recovery than does the federal government.

Now the GAO's "Federal Debt: Answers to Frequently Asked Questions" doesn't ask, "What band of buffoons put us here?" At least, not in those exact words.

But the 90-page report released Thursday does include really long answers to 23 short questions, such as, "How large is the federal debt?"

It's big -- bigger than all the second mortgages on all the trailers in Crawford, Texas. It has more zeros than the current administration's environmental record. Your outstanding Visa bill doesn't exist in comparison.

The report says the gross debt is about $6.8 trillion. (told you it was gross). When we add the $3.9 trillion in debt held by the public to the $2.9 trillion in debt held by the government, we get $6.8 trillion -- and a headache.

Honestly, the rest of the explanation will make your head hurt. Let's move on.

"What is debt held by the public?"

Something we don't probably want to know. It is federal debt held by all investors outside of federal government and includes corporations, state, local and foreign governments and the Federal Reserve System.

That's pretty much everything that's not Social Security and Medicare. Taxpayers cover the interest.

According to the U.S. Bureau of the Public Debt's Web site, as of Wednesday the public debt was actually $4.2 trillion. But, let's not pick over pennies -- especially when there would be enough of them to fill the Thomas & Mack Center more than once. (If you could get them through security.)

Public debt represents what the government has borrowed in the past, and it burdens our economy in the present.

In contrast, the debt held by government burdens our future. (And we thought they couldn't plan ahead.) When a government account has to pay out more than it has received, it does what we all do -- juggles until the money runs out. For example, the GAO's projections show the Social Security trust fund will run out in 2018.

If you were born in 1956, that's the year you turn 62. If you're born after that, I hope you like your job. You're going to be doing it for a long time.

The federal government has carried debt virtually throughout U.S. history, with public debt rising mostly in times of war or recession. But budget deficits from 1970s through the mid-1990s greatly increased the public debt "during a period marked by the absence of a major war or depression," the report says.

Deficit reductions in the 1990s led to surpluses in 1998 through 2001.

"However, tax cuts, increased spending and weak economic growth" brought back the deficit in 2002 and 2003, the GAO says. And the agency predicts it will continue rising if policies don't change.

"Long-term simulations by GAO, CBO and the Office of Management and Budget show that absent policy changes, debt held by the public would rise to levels ultimately unsustainable by the U.S. economy," the report says.

I lived on an "unsustainable economy" through most of my 20s. It's doable.

But you have to like macaroni and cheese.

The blue box is best -- if you can afford it.