The unfunded liabilities of the U.S. government grew in one year by $11 trillion. So says Prof. Lawrence Kotlikoff of Boston University. He is using figures provided by the Congressional Budget Office.
He makes a good point. Republicans and Democrats in Congress a year ago could not figure ways to cut $210 billion a year for a decade. Meanwhile, the real debt grew by $11 trillion.
We live in a fantasy world. Someday, the fantasy will end.
The fiscal gap is getting worse each year. What is this?
The fiscal gap is the present value difference between projected future spending and revenue. It captures all government liabilities, whether they are official obligations to service Treasury bonds or unofficial commitments, such as paying for food stamps or buying drones.
Understand, this is the present value of the gap. It’s not that, over the next 75 years, there will be $11 trillion more debt. It is that the present value of the entire gap is $11 trillion. We need $11 trillion today, invested in high-return capital in the private sector, to meet future obligations.
It gets worse.
The U.S. fiscal gap, calculated (by us) using the Congressional Budget Office’s realistic long-term budget forecast — the Alternative Fiscal Scenario — is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference — this year’s true federal deficit — is 10 times larger than the official deficit and roughly as large as the entire stock of official debt in public hands.
This has been accelerating for years.
This fantastic and dangerous growth in the fiscal gap is not new. In 2003 and 2004, the economists Alan Auerbach> and William Gale extended the CBO’s short-term forecast and measured fiscal gaps of $60 trillion and $86 trillion, respectively. In 2007, the first year the CBO produced the Alternative Fiscal Scenario, the gap, by our reckoning, stood at $175 trillion. By 2009, when the CBO began reporting the AFS annually, the gap was $184 trillion. In 2010, it was $202 trillion, followed by $211 trillion in 2011 and $222 trillion in 2012.
There is no awareness of this. Kotlikoff is the only economist to discuss this. His findings are not disputed, merely ignored.
Congress will not stop this. Members are unaware of it.
The numbers are simply inconceivable. Therefore, no one takes them seriously.
When fully retired, 78 million baby boomers will collect, on average, more than 85 percent of per-capita gross domestic product ($40,000 in today’s dollars) in Social Security, Medicare and Medicaid benefits. Each passing year brings these outlays one year closer, which raises their present value.
What can be done? Nothing reasonable. Taxes can be raised by 64%. But revenues will not follow tax hikes. That’s basic Laffer curve reality.
Alternatively, the government can cut Medicare and Social Security by 40%. Not gonna happen.
Then what will happen? Simple. Congress will kick the can down the road.
Voters, unaware of any of this, will not prepare.
There is going to be a Great Default.
The day of reckoning is coming. Be prepared.
[...] as large as the entire stock of official debt in public hands.This has been accelerating for years.READ MORE August 10th, 2012 | Tags: Trillion, Fantasy world, federal debt, US Government | Category: [...]
[...] Gary North writes, Understand, this is the present value of the gap. It’s not that, over the next 75 years, there will be $11 trillion more debt. It is that the present value of the entire gap is $11 trillion. We need $11 trillion today, invested in high-return capital in the private sector, to meet future obligations. [...]
[...] Congressman Xavaier Becerra (D-CA) repeats the accounting deception. “Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt.” It has added trillion of dollars to our debt, but the debt is hidden off budget. It is part of the $222 trillion in unfunded liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here. [...]
[...] liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here.Rep. Becerra’s deception was reinforced by Senator Bernie Sanders of Vermont. “I believe that [...]
[...] Congressman Xavaier Becerra (D-CA) repeats the accounting deception. “Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt.” It has added trillion of dollars to our debt, but the debt is hidden off budget. It is part of the $222 trillion in unfunded liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here. [...]
[...] The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in non-government projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here. [...]
[...] I posted an article on my Tea Party Economist site on the increase in the real debt of the U.S. government over the last year. The increase was $11 trillion. Read it here. [...]
[...] I posted an article on my Tea Party Economist site on the increase in the real debt of the U.S. government over the last year. The increase was $11 trillion. Read it here. [...]
[...] I posted an essay on my Tea Party Economist site on a boost in a genuine debt of a U.S. supervision over a final year. The boost was $11 trillion. Read it here. [...]
[...] The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in non-government projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here. [...]
[...] that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here. This estimate is 14 times what government reports as debt ($16 Trillion). The number itself is [...]
[...] The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in nongovernment projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here. [...]
[...] The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in nongovernment projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here. [...]
[...] L’obbligo totale, al momento non finanziato, del governo federale nei confronti degli elettori è ora di $222 biliardi. Questo non vuol dire che, per l’intera vita del programma, il governo sarà a corto di $220 biliardi ma che quello è il loro valore attualizzato. Ciò significa che il governo dovrebbe mettere da parte questi soldi subito, investire questi soldi in progetti non-governativi che pagheranno un tasso positivo di ritorno, e quindi finanziare l’ammortamento di questo debito. Ho riportato le stime qui. [...]
[...] them 20 years in county government politics. The federal government will eventually go bankrupt. This is inevitable statistically. Political power will shift back to the counties: the core tax base. Then this video will come [...]
[...] Congressman Xavaier Becerra (D-CA) repeats the accounting deception. “Over 77 years and now through 13 recessions, Social Security has not added one penny to our deficit or our debt.” It has added trillion of dollars to our debt, but the debt is hidden off budget. It is part of the $222 trillionin unfunded liabilities reported by Prof. Lawrence Kotlikoff of Boston University. I have written about this here. [...]
[...] posted an article on my Tea Party Economist site on the increase in the real debt of the US government over the last [...]
[...] = ""; google_ui_features = "rc:0"; mises.org / By Gary North / Monday, September 24, 2012I posted an article on my Tea Party Economist site on the increase in the real debt of the US government over the last [...]
[...] posted an article on my Tea Party Economist site on the increase in the real debt of the US government over the last [...]
[...] primarily in Social Security, Medicare, and Medicaid. This deficit dwarfs the on-budget deficit. It is rising at $11 trillion a year. This deficit has a present value of $222 trillion. This means that the federal government, today, [...]
[...] [...]
[...] But in the way that it will continue to mask the financial mess that the U.S. government is in — $11 trillion annual increases in the national debt, nearly 20% unemployment, and war after war — QE3 has done [...]
[...] But in the way that it will continue to mask the financial mess that the U.S. government is in — $11 trillion annual increases in the national debt, nearly20% unemployment, and war after war — QE3 has done [...]
[...] posted an article on my Tea Party Economist site on the increase in the real debt of the US government over the last year. The increase was $11 [...]
[...] del debito reale del governo degli Stati Uniti nel corso dell’ultimo anno: $11 biliardi. Potete leggerlo qui. Impossibile? Per niente. L’aumento annuale – del deficit – sarà sempre più grande in [...]
[...] The problem with this article is it is na‹ve. It is Pollyanna to the core. It begins with the on-budget deficit: a mere $1.2 trillion a year. The on-budget deficit is peripheral to the real federal deficit, which reflects the unfunded liabilities of the federal government, primarily in Social Security, Medicare, and Medicaid. This deficit dwarfs the on-budget deficit. It is rising at $11 trillion a year. (http://teapartyeconomist.com/?p=8108) [...]
[...] The total obligation of the federal government to voters that is not funded at the present time is now $222 trillion. This does not mean that, over the entire life of the program, the government will be short $220 trillion. It means that the present value of the unfunded liability is $220 trillion. This means that the government would have to set aside $220 trillion immediately, invest this money in non-government projects that will pay a positive rate of return, and will therefore fund the amortization of this debt. I have written about the estimate here. [...]
[...] http://teapartyeconomist.com/2012/08/10/11-trillion-increase-in-debt-in-one-year/Related posts:Reality Check: Is Al-Qaeda An Enemy Or Not?The Secret Team – L. Fletcher Prouty (1989)Reality Check: The U.S. Government Created Al Qaeda?Marc Faber on Bloomberg Radio August 13, 2012ACLU Seeks GPS Spying Documents From FBIA Pleasant Day in the Park in the Only 'Democracy' in the Middle EastShock Surveillance Video Shows LAPD Officers Body-Slamming ‘Defenseless Woman’ Into the Pavement Dur…FBI begins installation of $1 billion face recognition system across AmericaThe Machine: The Truth Behind Teachers UnionsWashington Selectively Rolling Back Dodd-FrankTennessee: Officer Testimony Beats Hard Evidence in Speeding CaseFlorida: Court Approves Detaining Motorists at Toll BoothPeter Schiff: The Real Fiscal Cliff – How to Spot the LedgeA Sign of the Apocalypse? The French and Italians Are More Fiscally Conservative than Americans!TSA hires a priest excluded from clergy for child molestation This entry was posted in Alternative News and tagged Bailout Fail, Economics, Statism by admin. Bookmark the permalink. [...]
[...] Medicare and Social Security to remain solvent, the U.S. government would have to invest over $220 trillion right now, and get a roughly five percent rate of return. Medicare alone accounts for easily 80% of [...]
[...] But in the way that it will continue to mask the financial mess that the U.S. government is in — $11 trillion annual increases in the national debt, nearly 20% unemployment, and war after war — QE3 has done [...]
[...] No other government, ever, has even been able to dream of confiscating as much wealth as the US federal government does today. It is by far the most well-funded State in all of human history. Yet they're totally flat broke. Busted. Actually it's much worse than that — they're upside down teetering at the edge of default. [...]
[...] My suggestion: start making major changes in your life’s plan. Make them in terms of reality: the unfunded present value of future federal liabilities: $222 trillion. [...]
[...] degli impegni di spesa non coperti relativi a Previdenza Sociale, Medicare e Medicaid è pari a 222mila miliardi di dollari. In nessun modo un impegno simile potrà mai essere onorato. È matematicamente impossibile che lo [...]
[...] $222 trillion in unfunded liabilities [...]
[...] be a Great Default, as Gary North calls it. There is no way the unfunded liabilities of $222 trillion for Social Security and Medicare can ever be paid. There will be cuts – it’s just a [...]
Put a cap on market capitalization of big listed companies. Millions of new jobs will be created. http://www.change.org/en-IN/petitions/obama-admin…