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Sorting out the truth in politics

PolitiFact: Rep. Paul Ryan figures U.S. debt biggest way possible

The statement

"Our debt is already bigger than our economy."

U.S. Rep. Paul Ryan, R-Wis., in a speech at CPAC

The ruling

The Bureau of Economic Analysis recently put GDP at just over $15.8  trillion. The government defines the GDP — gross domestic product — as the market value of the goods and services produced by labor and property within the country.

As for the debt, the U.S. Treasury is the go-to source. As of March 18, total outstanding public debt was $16,736,188,026,047.86. (We'll call it $16.7 trillion for everyone's sanity.) That's broken down into debt held by the public and intragovernmental holdings.

• Debt held by the public: $11.9 trillion.

• Intragovernmental holdings: $4.8 trillion.

Intragovernmental debt refers to money owed by agencies within government to other agencies — basically an internal accounting issue. An example: Social Security surpluses that the government uses for other federal operations. Such money will have to be repaid, it's presumed, but the demand is less pressing right now and it doesn't affect credit markets.

In contrast, public debt reflects money borrowed from outside sources — giving it more of a connection to the economy, Josh Gordon, an analyst with the anti-deficit Concord Coalition, told PolitiFact Texas. "If your problem with the national debt is that you think it's affecting the economy or interest rates or something like that, the only part of the national debt that affects the economy is the debt held by the public. That's where the (U.S.) Treasury is borrowing money on the open market."

So, if we just consider debt held by the public — which is what most affects the economy — it totals about 75 percent of GDP — not, as Ryan said, more than the size of the economy.

But Ryan isn't entirely off-base, especially since partisans tend to disagree about the importance of intragovernmental holdings.

"When you dig a bit deeper, you hit a partisan debate about the portion of the debt not held by the public, most of which is held by the government in trust funds. Republicans say that the trust funds are filled with IOUs, which eventually will have to be redeemed with other funds. Democrats say that the trust funds represent binding promises that government has made to tens of millions of Americans. They're both right," said William Galston, an expert with the Brookings Institution.

If you count debt held by the public and intragovernmental holdings, the debt is roughly 105 percent of the economy. But counting only debt held by the public, which is what many economists say affects the wider economy and credit markets, the debt is only 75 percent of GDP.

We rate the claim Half True.

Edited for print. Read the full version at

PolitiFact: Rep. Paul Ryan figures U.S. debt biggest way possible 03/19/13 [Last modified: Tuesday, March 19, 2013 8:33pm]
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