Alex Brill, an economist with the American Enterprise Institute, a conservative research center in Washington, said that counting external and internal debt together didn't make economic sense and blurred the real fiscal situation the U.S. faces.To pull all the pieces together, think of that $3,000 college fund as accumulated receipts in the Social Security Trust Fund or the Highway Trust Fund, and the $10,000 as emergency expenditures on hurricane recovery or regime change in an annoying government. The difference is that in the family scenario, if Mother or Dad takes sick and Junior's college fund goes to medical expenses, Junior might be in the work force or the military or working his way through a cheaper college after high school. When the government is unable to make good on all its promises, the people who made decisions in the expectation that those promises were good are in rougher straits than Junior.
"Not all of the debt is the same, and it doesn't all matter the same," Brill said. "What really matters is debt held by the public."
Those are the outside bondholders, and they take up about two-thirds of the total U.S. debt. As of Monday, the most recent date for which the Treasury Department provided figures, the U.S. owed $9.75 trillion to them.
Almost one-third of the U.S. debt — $4.59 trillion — is in the form of IOUs dedicated to programs such as Social Security, Medicare and the pension plans for federal workers and military personnel. That's what the United States owes its citizens.
As an analogy, Brill suggests thinking of a family that's facing medical bills now and college bills in the future. Say the family has set aside $3,000 for college costs, encounters a $13,000 medical bill, pays $10,000 of it with a credit card and uses the college savings to pay the rest.
That family's real debt is $10,000, but the Treasury Department's method of calculation would place it at $13,000.
While the family does need to replenish the college savings, the movement of money within its personal accounts doesn't affect its credit score.
"When you blend this real debt with the kind of accounting debt where the left hand borrows from the right hand, you end up with something that's completely meaningless in economic terms," Brill said.
This practice enables some lawmakers to exaggerate the severity of the problem that underlies the debt-limit impasse.
For example, Sen. Jeff Sessions, an Alabama Republican, told Fox News earlier this month: "The debt as it exists today — 95 percent of GDP — is so high, economists tell us it's dragging down (economic) growth at least 1 percent."
But considering only the $9.75 trillion that's owed to bondholders, the U.S. debt is 65 percent of the GDP; still worrisome, but nowhere near the 140 percent level that's fueling the Greek debt crisis or the 100 percent-plus levels of other troubled European governments.
This kind of distinction, though, provides little solace in the face of the coming entitlement crisis just a few years down the road.
President Barack Obama and lawmakers are struggling to agree on a debt-ceiling hike before next Tuesday, which would allow the government to borrow more money in order to fund a more than $1 trillion budget deficit.
As they wrangle, they're only tenuously offering solutions to entitlement obligations that are many orders of magnitudes more. Those obligations eventually will total at least $60 trillion.
"This huge debt burden won't bankrupt the country on Aug. 3, but it does demonstrate that there is an enormous and growing problem that gets much harder to deal with the longer it is left unaddressed," said Christopher Frenze, a former staff director of the American Action Forum, a conservative policy institute in Washington.
That coming threat stems from another issue, the IOUs to ourselves.
For years, increased spending has forced the government to raid federal trust funds. It takes payroll tax revenues earmarked for Social Security or Medicare, for instance, and uses them to cover unrelated expenses. But it doesn't have a way to pay back the money.
It would be as if a family kept a budget on paper that put aside set sums each month for defined needs, but it spent all that money and more in its daily activities.
Kenneth Rogoff, a Harvard economist who's advised U.S. government leaders, views the debt-limit crisis as concealing a deeper dilemma: Americans expect federal benefits they're not willing to pay for.
"We're on a completely unsustainable path," Rogoff said. "People are just convinced the government doesn't need any money. They're mad at all the borrowing, but they get even madder when taxes go up or they don't get the programs they like."
Confounding the issue is any reasonable evaluation of the federal balance sheet. This intriguing article suggests that some outstanding debt will never be paid off, including obligations from the War for Independence and the Civil War (the reason for the public debt section of the Fourteenth Amendment.) But where there are liabilities, there are also assets (and, in a business, stockholders' equity). Although the Treasury issues statements purporting to show such things, I was not able, with my Sprecher-relaxed efforts, to locate an analysis that included such things as the depreciated value of Amtrak's locomotives and the National Parks and the Interstate Highways and the aircraft carriers and the Western dams that Rachel Maddow finds so sexy and all the other stuff that the government has borrowed money to build.