Off-Balance-Sheet Federal Liabilities
Much attention has been given to the recent growth of the U.S. federal debt. This paper examines the growth of federal liabilities that are not included in the officially reported numbers. These take the form of implicit or explicit government guarantees and commitments. The five major categories surveyed include support for housing, other loan guarantees, deposit insurance, actions taken by the Federal Reserve, and government trust funds. The total dollar value of notional off-balance-sheet commitments came to $70 trillion as of 2012, or 6 times the size of the reported on-balance-sheet debt. The paper reviews the potential costs and benefits of these off-balance-sheet commitments and their role in precipitating or mitigating the financial crisis of 2008.
I am grateful to Marjorie Flavin, Robert Hall, Douglas Holtz-Eakin, Jeffrey Miron, Phillip Swagel, and seminar and conference participants at U.C. San Diego and the Cato Institute for helpful comments on this paper. This study was prepared for Cato Papers on Public Policy. The views expressed herein are those of the author and do not necessarily reflect the views of the National Bureau of Economic Research.