News Tuesday that gross U.S. government debt had surpassed $30 trillion for the first time caused a flutter of headlines but merely yawns from the political class. That might have something to do with the arsonist not wanting to hang out at the scene of his fire. But it’s worth a moment to explain how to think about that gargantuan debt number.
The first point is that the debt really isn’t $30 trillion. About $6 trillion of that is debt the government owes to itself in Social Security and other IOUs. Social Security is a promise made by politicians to workers. It isn’t a contractual debt like a Treasury bill that must be repaid or risk default. Future politicians can refuse to pay workers what they owe, and eventually they will.