Real U.S. Government Debt is Much Worse Than You Think
The Daily Sheeple
October 29th, 2010
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 Ã¢â¬â 840 per cent of current GDP. Ã¢â¬ÅLetÃ¢â¬â¢s get real,Ã¢â¬Â Prof. Kotlikoff says. Ã¢â¬ÅThe U.S. is bankrupt.Ã¢â¬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 Ã¢â¬â far worse than the Washington-based lender of last resort has previously acknowledged. Ã¢â¬ÅThe U.S. fiscal gap is huge,Ã¢â¬Â the IMF asserted in a June report. Ã¢â¬ÅClosing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.Ã¢â¬Â
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMFÃ¢â¬â¢s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling Ã¢â¬â and possibly worse than appalling.
Prof. Kotlikoff says: Ã¢â¬ÅThe 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.
Ã¢â¬ÅAmericaÃ¢â¬â¢s fiscal gap is enormous Ã¢â¬â so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems Ã¢â¬â as well as military and other discretionary spending cuts.Ã¢â¬Â
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