The alarming figure of $16 trillion for the debt of the United States has been much in the news.  That's the amount of actual bond debt outstanding, now somewhat exceeding the entire GDP and growing rapidly.  But aren't there also contingent liabilities out there?  For those who don't know that term, that is the amount that the Federal government has guaranteed, or insured, or otherwise put its credit behind, although not yet actually spent.  It's not so easy to come up with any kind of comprehensive numbers, but I'll make a start.  Also, I'll save the big ones (Medicare, Social Security) for last.

The Federal government insures almost all bank deposits through the FDIC.  In May 2012 the Wall Street Journal put the total amount of U.S. bank deposits at $10.26 trillion.  Could we ever have a systemic banking crisis where essentially all of the banks become insolvent at once?  We almost had one just a couple of years ago.  How about the S&L crisis in the 80s, where all the S&Ls became insolvent at once? And can we think of examples from other countries?  How about Japan in the 1990s?  Russia in 1998?  And don't even get started on Latin America!

What's the total of Federal housing guarantees?  According to Forbes a few days ago, the FHA (which has stepped into the breach to guarantee mortgages given the weakness of Fannie and Freddie) is up to $1.08 trillion.  Oh, and almost 10% of that is in default and they look to be needing a bailout soon.  But don't worry, they have an infinite right to just draw on the Treasury, so no need to go to Congress for an appropriation.  Here's an article in the American Thinker that puts the total of guarantees and debt of Fannie and Freddie at $7 trillion.  Supposedly the Treasury is ending its open checkbook to Fannie and Freddie as of December 31, 2012.  Do you believe it?

Do you know that the Federal government guarantees all private pensions?  The agency is called the Pension Benefit Guaranty Corporation, PBGC.  And by the way, what is the possibility that any private pension plan can meet its obligations when the Federal Reserve keeps interest rates at zero and nobody can make a dime on any investment?  So how is the PBGC doing?  Here's the latest from Fox News on November 16:  they just ran a $34 billion deficit for the year ended September 30, up from a mere $26 billion last year.  

If the trend continues, the agency could struggle to pay benefits without an infusion of taxpayer funds.

What a surprise!

How about flood insurance?  If you didn't know it before Sandy, you surely know now, that the Federal government issues essentially all flood insurance to those in the path of hurricanes.  Turns out that after Katrina the flood insurance program didn't have nearly enough money to pay its debts, so the Feds gave them a line of credit of $20 billion.  They then borrowed $18 billion to pay claims, and haven't repaid any meaningful amount.  Now we have Sandy.  Oops!  The cost of that is projected at $6 - 12 billion according to the Chicago Tribune.  So we are about to blow through the $20 billion cap by multiple billions.  Time for another bailout!  My idea is that we'll spend the money building bigger and better on the same barrier islands.  It's not a problem as long as you have the infinite credit card at your back.

Let's get away from these little numbers and back to something noticeable.  Virtually all student loan debt is backed by the government.  How much is that?  According to this from the New York Times, the total of student loan debt passed $1 trillion in 2011.  Likelihood of getting that back?  Remember, these borrowers are the same people who are supposed to pay for the retirement income and medical benefits of the baby boom generation.

Skipping over a few trivialities (crop insurance, terrorism insurance) let's get to some real numbers.  What is the unfunded liability of the Medicare program?   To be fair, Medicare is different from the other programs above in that the Federal government reserves the right to cut it.  But if you think it should be continued at least as is, or that it would be politically "impossible" to cut, then these numbers are highly relevant.  According to this from the Cato Institute, the Medicare trustees themselves put the number for the unfunded liabilities at $38.6 trillion.  Tanner of Cato thinks $90 trillion is more like it:

Let's try to put the ongoing debate over the future of Medicare into a little bit of context. Last year, Americans paid $274 billion in Medicare taxes and premiums. At the same time, the program paid out $564 billion in benefits. That amounts to a shortfall of roughly $290 billion. Looking into the future, even the most optimistic estimate by the program's trustees puts Medicare's future unfunded liabilities at more than $38.6 trillion. More realistic projections suggest the shortfall could easily top $90 trillion.

Faced with this ocean of red ink, the Obama and Romney campaigns are busy claiming that the other guy wants to cut Medicare. They, on the other hand, would never think for a moment about cutting anyone's Medicare benefits. Hello. Can anyone out there do math?

And yet one more:  Social Security's unfunded liability, according to this from Bloomberg News in July 2012, is $20.5 trillion.

Medicaid?  They don't even put out a number for that one, at least that I can find.  It may be the biggest of all!

The bottom line:  you either believe that it's possible for a big borrower with the infinite credit card to take on all the downside risk of life for everybody, or you don't.  I just predict, when this ends it's not going to be pretty.