POLITICS
02/24/2012 03:45 pm ET Updated Feb 24, 2012

Mitt Romney Claims U.S. Owes $62 Trillion In 'Unfunded Promises'

In Detroit Friday, Mitt Romney said he loses sleep because of the U.S. government's "$62 trillion in unfunded promises."

"Today, we face $62 trillion in unfunded promises in our entitlement programs -- Medicare and Social Security being the largest," Romney said. "We talk a lot about the $15 trillion of deficit debt that has been piled up. It is the $62 trillion of unfunded promises that keeps most of us up at night."

The $62 trillion figure comes from the $15 trillion in money the government actually owes -- commonly known as the national debt -- plus projections about what it will eventually spend on entitlement programs, mainly Medicare, Medicaid, and Social Security.

The stat was first propagated by the anti-deficit Peter G. Peterson Foundation and USA Today last year. PolitiFact called it dated, and Bloomberg editors called it bogus, disregarding whether it's dated:

In a nutshell, this brand of analysis counts future entitlement and pension payments as obligations of the government, and ultimately of private households, but not as assets for the people who benefit from these payments. If a government retiree is entitled to a pension of, say, $35,000 a year, that is both a cost to the government and a benefit to that retiree. But only the cost is taken into account.

That’s not the only flaw. For the most part, these sorts of approaches assume that a dollar is a dollar, no matter when it comes in or goes out. But a dollar tomorrow is worth a lot more than a dollar 50 years from now. This is not only because of inflation, but also because of the time value of money. A dollar today can be invested, and at 5 percent interest will be worth $11.46 in 50 years. By contrast, the present value today of a dollar 50 years from now (again at 5 percent) is only 8 cents. Much of the $62 trillion that the government supposedly owes is in dollars decades from now.

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