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 √Ę‚ā¨‚Äú 840 per cent of current GDP. √Ę‚ā¨ŇďLet√Ę‚ā¨‚ĄĘs get real,√Ę‚ā¨¬Ě Prof. Kotlikoff says. √Ę‚ā¨ŇďThe U.S. is bankrupt.√Ę‚ā¨¬Ě
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 √Ę‚ā¨‚Äú far worse than the Washington-based lender of last resort has previously acknowledged. √Ę‚ā¨ŇďThe U.S. fiscal gap is huge,√Ę‚ā¨¬Ě the IMF asserted in a June report. √Ę‚ā¨ŇďClosing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.√Ę‚ā¨¬Ě
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF√Ę‚ā¨‚ĄĘs fiscal fix, a doubling of federal taxes in perpetuity, would be appalling √Ę‚ā¨‚Äú and possibly worse than appalling.
Prof. Kotlikoff says: √Ę‚ā¨ŇďThe 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.
√Ę‚ā¨ŇďAmerica√Ę‚ā¨‚ĄĘs fiscal gap is enormous √Ę‚ā¨‚Äú so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems √Ę‚ā¨‚Äú as well as military and other discretionary spending cuts.√Ę‚ā¨¬Ě
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