Fox News promoted research that erroneously suggests current federal debt stands at $70 trillion, a figure that amounts to a scare tactic devoid of relevant context.
On the August 15 edition of Fox News' America's Newsroom, hosts Martha MacCallum and Bill Hemmer suggested that the current figure of national debt is grossly underestimated. MacCallum claimed that, according to research by economist James Hamilton, "the true national debt is actually more like $70 trillion and that the government has been lowballing us for years." Hemmer then explained that the figure included Social Security, Medicare, and pension promises and claimed that "America could be in a whole lot of hurt."
The $70 trillion debt figure was also featured prominently in an article on FoxNews.com. According to the article:
Hamilton believes the government is miscalculating what it owes by leaving out certain unfunded liabilities that include government loan guarantees, deposit insurance, and actions taken by the Federal Reserve as well as the cost of other government trust funds. Factoring in those figures brings the total amount the government owes to a staggering $70 trillion, he says.
But according to experts, including liabilities in calculations of debt is inherently misleading.
The first problem is the way in which Fox misleadingly presents the figure as "debt." In an article responding to previous claims of debt being much higher than reported due to unfunded liabilities, The Atlantic's Derek Thompson explained that debt figures shouldn't include future liabilities:
Our $16 trillion in debt and our $87 trillion in "unfunded liabilities" represent two very different ideas: real past promises and projected future promises. Real past promises are, well, very real. We have to pay back our debt. Failing to do it would be an illegal and disastrous default. Unfunded liabilities are future promises, and, since they're not as real, we can change them whenever we want without destroying ourselves. For example, raising the taxable income ceiling and slowing the growth of benefits could reduce the Social Security gap to zero tomorrow.
Indeed, as Media Matters has previously noted, experts agree that citing unfunded liabilities typically amounts to nothing more than a scare tactic, mainly because, as the Congressional Budget Office explained, "no government obligation can be truly considered 'unfunded' because of the U.S. government's sovereign power to tax."
The second problem with Fox's promotion of the figure is that it removes important context, relying on a raw number instead of a relevant percentage. According to Hamilton's report, the bulk of the $70 trillion is due to obligations for Social Security and Medicare -- amounting to a total of $54.1 trillion. But while the figure may seem large, when expressed with relevant context, its gravity is greatly reduced.
In an interview with Media Matters, Josh Bivens, research and policy director at the Economic Policy Institute, explained that when compared with the size of the economy, the liabilities associated with Social Security and Medicare amount to roughly "one and a half percent of GDP." While the figure cited by Fox may be correct, omitting the size of liabilities relative to GDP unnecessarily stokes fears and misinforms viewers.
Furthermore, Bivens noted that other liabilities cited by Hamilton -- such as student loans, housing assistance, and the Federal Deposit Insurance Corp. -- typically have assets directly attached to them that could generate revenue, a fact ignored by the report.