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 â€“ 840 per cent of current GDP. â€œLetâ€™s get real,â€ Prof. Kotlikoff says. â€œThe U.S. is bankrupt.â€
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 â€“ far worse than the Washington-based lender of last resort has previously acknowledged. â€œThe U.S. fiscal gap is huge,â€ the IMF asserted in a June report. â€œClosing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.â€
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMFâ€™s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling â€“ and possibly worse than appalling.
Prof. Kotlikoff says: â€œThe 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.
â€œAmericaâ€™s fiscal gap is enormous â€“ so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems â€“ as well as military and other discretionary spending cuts.â€
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