Real U.S. Government Debt is Much Worse Than You Think
The Daily Sheeple
October 29th, 2010
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Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion Ă˘â‚¬â€ś 840 per cent of current GDP. Ă˘â‚¬Ĺ“LetĂ˘â‚¬â„˘s get real,Ă˘â‚¬Âť Prof. Kotlikoff says. Ă˘â‚¬Ĺ“The U.S. is bankrupt.Ă˘â‚¬Âť
Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble Ă˘â‚¬â€ś far worse than the Washington-based lender of last resort has previously acknowledged. Ă˘â‚¬Ĺ“The U.S. fiscal gap is huge,Ă˘â‚¬Âť the IMF asserted in a June report. Ă˘â‚¬Ĺ“Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.Ă˘â‚¬Âť
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMFĂ˘â‚¬â„˘s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling Ă˘â‚¬â€ś and possibly worse than appalling.
Prof. Kotlikoff says: Ă˘â‚¬Ĺ“The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
Ă˘â‚¬Ĺ“AmericaĂ˘â‚¬â„˘s fiscal gap is enormous Ă˘â‚¬â€ś so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems Ă˘â‚¬â€ś as well as military and other discretionary spending cuts.Ă˘â‚¬Âť
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