The scary actual U.S. government debt

[steve2470]

http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/the-scary-actual-us-government-debt/article1773879/

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 – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”

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 – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”

This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.

Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap , would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.

Critiques invited, please.

[Kurt_and_Hunter]

1. Very silly person

He rejects usual measures of debt to calculate what would happen at current revenue levels extrapolated.

We are in a huge economic crisis and thus revenues are way down... like WAY down.

So this bozo's deal is that if every year was exactly like the worst year ever then things would suck.

Duh.

[notesdev]

7. Things could continue to get worse as well

I see no reason for rosy optimism on the economy's future at this point, not when all the problems that got us here are as bad as ever.

[Roselma]

2. If Kotlikoff was good enough for Mike Gravel,

should he be good enough for the rest of us. http://en.wikipedia.org/wiki/Laurence_Kotlikoff

I don't know the answer to that, but I rather suspect that he thinks that we have to look out 50 years and consider Social Security and Medicare as debts. Insomuch as he may be doing that, I take Kotlikoff's evaluation with a grain of salt. Plus, he's a proponent of the "Fair Tax," so I wonder what his motivations might be for wanting heavier taxes on the middle class so that the wealthy might pay lower taxes. Just sayin'

[pa28]

3. He was a Reagan economist. Red flag #1

He's come up with a really scary number to convince us that we need a consumption tax but he never says how far he's projecting to get that number. It could be 100 years or more . . . just as long as we get a staggering figure to prove his point.

He's also counting Social Security which is designed as a pay as you go system and apparently he's also using current deficit levels. I guess he's assuming the economy will never recover and tax revenues will never rebound but once again he never says for sure.

We have to remember the deficit commission report is coming up and to me this just seems like recycling of the old propaganda to create an austerity friendly political climate.

[customerserviceguy]

4. Why not count Social Security as a debt?

When I get involved on threads concerning the Simpson Commission (which will be the next political story after the shock of the election starts to fade away), people there tell me that those speical Treasury securities are just the same thing as the bonds and notes we've sold to China, and that they really will be redeemed, no matter what.

Now, I disagree with them, but it's either debt, in which case it exists, or it's not, and I'm right.

[pa28]

5. He's talking about future liabilities for the SS system.

I don't think he's counting revenues from FICA either but once again he never says for sure.

[Scruffy1]

6. His opening sentence is even a lie.

By definition a Sovereign state can't go bankrupt. He knows this and he's just pumping BS, which this A hole has done for years. As far as the IMF goes these neo-nazis will roast in hell I'm sure. Look how Argentina recovered once they got them off of their backs. They are nothing but enforcers for the international corporate Mafia.