Everyone knows America is in debt—but few realize how much. The debt is so deep, the government will never pay it off. It continues to spend more than it collects every year, far more than it even reports.

The government officially reports that in the fiscal year ending Sept. 30, 2006, for example, it was in the red by $248 billion. A closer look at the real books reveals the deficit was actually an unimaginable $4.6 trillion. That’s right, just for this past fiscal year.

Econometrician John Williams, who publishes the website Shadow Government Statistics, asserts that the $4.6 trillion figure “is fully validated in the Financial Report of the United States, a little-known report Congress has mandated that the Treasury Department publishes each year, reporting the federal budget on a gaap [generally accepted accounting principles] accounting basis, not on a cash accrual basis.”

America’s liabilities are so large that according to Williams, “Even if the federal government raised individual and corporate income taxes to 100 percent, simply confiscating every penny every business and person in the U.S. made, we would still have a federal deficit.”

So how can the government get away with reporting a “mere” $248 billion deficit?

“The trick,” says Williams, “is that the Treasury essentially steals [incoming] Social Security taxes, without accounting for any offsetting Social Security liability.” Official numbers are based upon “cash accounting” and do not factor in known future costs such as Social Security or Medicare. Under this accounting procedure, the government counts incoming Social Security not as people’s savings, which it actually is, but as general revenue, disregarding the fact that the government has promised to pay it back to retirees in the future.

Cash accounting obviously makes the government’s financial situation appear much healthier than it really is. However, just because the government and most media outlets stick to the $248 billion figure doesn’t mean America’s actual debts are not accumulating.

In fact, sneaky government budget reporting has allowed the nation to accrue debts that would have caused a massive uproar had the truth been widely reported. On a gaap accounting basis—which includes government promises such as Social Security, Medicare, pensions and all other non-reported liabilities—the total U.S. government debt is now $53.1 trillion, says Williams.

“With less than one tenth of the actual deficit being reported each year, a cumulative negative net worth … has built up in stealth,” he says, “to where the total obligations of the U.S. government are now more than four times our annual gross domestic product.”

Yet, if America’s finances are in such dire straights, why isn’t more fuss being made about it? Why haven’t media personalities and financial experts trumpeted the fact that America is headed toward bankruptcy?

“There are lots of people who know that the federal deficit is in the trillions,” according to Williams. “The problem is that few dare sound the alarm. The magnitude of the budget deficit problem is just too enormous and neither political party has the courage to address the problem.”

“It’s not the type of news Reuters, Bloomberg and the Wall Street Journal like to broadcast to investors and the American public,” he said. “Besides, the financial press won’t take the time and effort to analyze the figures and comb through the footnotes.”

Perhaps a more sinister explanation is that the government does not intend to fully repay all its liabilities.

At least one of the government’s own accountants thinks this is the case. To explain why his office did not include Social Security and Medicare in the government’s official budget, then acting director of the president’s Office of Management Budget said it was because they do not “represent a legal obligation because Congress has the authority to increase or reduce social insurance benefits at any time,” reported USA Today on August 4.

Gimmick book-keeping and poor deficit reporting aside, America’s true debt is rapidly increasing. Eventually, America will find that there are no more easy lenders and that its debts will have to be paid. When that day comes—and signs like a sliding dollar indicate that it is nearing—inflation will soar, interest rates will jump and the economy will take a severe hit.