Economist: US bankrupt and our actual debt is $202 trillion

Post Reply
User avatar
kramer
Posts: 8852
Joined: Mon Nov 19, 2007 8:38 pm

Economist: US bankrupt and our actual debt is $202 trillion

Post by kramer » Mon Sep 20, 2010 4:19 pm

U.S. Is Bankrupt and We Don't Even Know It: Laurence Kotlikoff
By Laurence Kotlikoff - Aug 10, 2010
Bloomberg Opinion
Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills.

What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy.

Last month, the International Monetary Fund released its annual review of U.S. economic policy. Its summary contained these bland words about U.S. fiscal policy: “Directors welcomed the authorities’ commitment to fiscal stabilization, but noted that a larger than budgeted adjustment would be required to stabilize debt-to-GDP.”

But delve deeper, and you will find that the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”

The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.

Double Our Taxes

To put 14 percent of gross domestic product in perspective, current federal revenue totals 14.9 percent of GDP. So the IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy set down in the Federal Insurance Contribution Act.

Such a tax hike would leave the U.S. running a surplus equal to 5 percent of GDP this year, rather than a 9 percent deficit. So the IMF is really saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

Is the IMF bonkers?

No. It has done its homework. So has the Congressional Budget Office whose Long-Term Budget Outlook, released in June, shows an even larger problem.

‘Unofficial’ Liabilities

Based on the CBO’s data, I calculate a fiscal gap of $202 trillion, which is more than 15 times the official debt. This gargantuan discrepancy between our “official” debt and our actual net indebtedness isn’t surprising. It reflects what economists call the labeling problem. Congress has been very careful over the years to label most of its liabilities “unofficial” to keep them off the books and far in the future.

http://www.bloomberg.com/news/print/201 ... ikoff.html
“We should have been warned by the CFC/ozone affair because the corruption of science in that was so bad that something like 80% of the measurements being made during that time were either faked, or incompetently done.”

- Scientist James Lovelock

User avatar
kramer
Posts: 8852
Joined: Mon Nov 19, 2007 8:38 pm

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by kramer » Mon Aug 26, 2013 10:39 am

An update on our debt from Kotlikoff who claims he has a more accurate number:
December 1, 2012
Economist Laurence Kotlikoff: U.S. $222 Trillion in Debt

http://www.realclearpolicy.com/blog/201 ... t_363.html
That works out to $666,666.67 dollars per person (assuming our US population is 330 million and I didn't make any math mistakes).

So who cares about what each of us owe, we can buy (as of today, Aug 26, '13) an electric can opener at Wal-mart for just $11.90 which is 5 cents cheaper than when Paul bought his.
“We should have been warned by the CFC/ozone affair because the corruption of science in that was so bad that something like 80% of the measurements being made during that time were either faked, or incompetently done.”

- Scientist James Lovelock

User avatar
Parrotpaul
Posts: 33550
Joined: Sun Oct 15, 2006 2:14 pm

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by Parrotpaul » Mon Aug 26, 2013 4:29 pm

Picked up a Walmart can opener for $8.99...times are good. How much do you pay for your can openers, Kramer?

The price of can openers is a much more real concept than worrying about something I don't have one iota of control over. Do you bite your fingernails?
"I think I may say that of all the men we meet with, nine parts of ten are what they are, good or evil, useful or not, by their education." John Locke

User avatar
Wabash
Posts: 24367
Joined: Wed Jan 26, 2011 7:29 am
Has thanked: 2 times

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by Wabash » Mon Aug 26, 2013 5:02 pm

kramer, there is a segment of the pundit class that makes their living imitating Chicken Little.

This guy sounds like one of them.
They told me if I voted for Hillary Clinton the president would be emotional, impulsive, and unpredictable. They were right. I voted for Hillary Clinton and got a president that is emotional, impulsive, and unpredictable.

User avatar
kramer
Posts: 8852
Joined: Mon Nov 19, 2007 8:38 pm

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by kramer » Mon Aug 26, 2013 6:17 pm

Parrotpaul
 ! Message from: John Q. Public
COMMA
what happened to the one you bought for $11.95 that you told us about in June 2011?
My guess is that the cheap China made junk fell apart already...
 ! Message from: John Q. Public
WTF WAS THE SECOND QUOTE FOR?
I use a hand-crank one, it lowers my carbon footprint. :D
“We should have been warned by the CFC/ozone affair because the corruption of science in that was so bad that something like 80% of the measurements being made during that time were either faked, or incompetently done.”

- Scientist James Lovelock

User avatar
Parrotpaul
Posts: 33550
Joined: Sun Oct 15, 2006 2:14 pm

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by Parrotpaul » Tue Aug 27, 2013 11:14 am

Mustn't have had a bout with arthritis yet.

I've got fourteen crullers that say you bought an 11.95 foreign made can opener at some discount appliance outlet....if not, I have another name for you. :cheers:
"I think I may say that of all the men we meet with, nine parts of ten are what they are, good or evil, useful or not, by their education." John Locke

User avatar
kramer
Posts: 8852
Joined: Mon Nov 19, 2007 8:38 pm

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by kramer » Tue Aug 27, 2013 11:24 am

Never had an electric can opener since I got married back in the 80s. I'm guessing its because we didn't eat much canned food.

And JQP, stop with the edits. It makes it harder to figure out who people are responding to without them (unless in a case like this, you reply directly after the post that you are replying to). Its why these forum software programs have the quote button...
“We should have been warned by the CFC/ozone affair because the corruption of science in that was so bad that something like 80% of the measurements being made during that time were either faked, or incompetently done.”

- Scientist James Lovelock

User avatar
John Q. Public
Site Admin
Posts: 19540
Joined: Mon Oct 02, 2006 5:56 am
Has thanked: 1 time
Been thanked: 2 times

Re: Economist: US bankrupt and our actual debt is $202 trill

Post by John Q. Public » Tue Aug 27, 2013 7:04 pm

This one doesn't have a quote button and I might remove the function if people don't stop misusing it.
Don't look at me, I just work here.

Post Reply