We have been warned yet again about the fiscal gap that is widening every second as this country continues to borrow and promise.
You’ve been reading about the financial crisis in Greece. Get it clear: the United States is very likely in worse shape than Greece. Leaders will extend and pretend as long as they can, but once reality sets in… history says the speed of the financial collapse will catch almost everyone by surprise.
I posted about this based on reporting from CNS News, but the New American published a longer and more detailed story: “Boston University Economist Calls Out Congress on Enormous Fiscal Gap.” It quotes Laurence Kotlikoff:
Let me get right to the point. Our country is broke. It’s not broke in 75 years or 50 years or 25 years or 10 years. It’s broke today. Indeed, it may well be in worse fiscal shape than any development country, including Greece.
Kotlikoff uses “fiscal gap accounting” and “generational accounting” in an attempt to get his arms around all the promises the government has made, whether “on books” (such as Treasury bills, notes, and bonds), or “off books” (such as Social Security, Medicare, Medicaid, and the Prescription Drug Benefit).
He then compares U.S. government promises to expected government income from all sources: taxes, fees, tariffs, interest payments, payroll taxes, and so forth. The fiscal gap, instead of the highly misleading (he says) number issued by the CBO of some $11 trillion, is really $210 trillion.
The fiscal gap, Kotlikoff told the Senate Budget Committee, “tells us the fiscal burden that will be imposed on today’s and tomorrow’s children if current adults don’t pay more to, or receive less from, the government.”
And that gap is growing by $5 trillion a year, not the paltry half trillion the CBO reports. He likens the national debt — the real national debt — to a gigantic federal credit card on which the government is making less than minimum payments every month: “If we fail to pay [even the interest on it], the fiscal gap will get larger.”
In 2003, the fiscal gap was $60 trillion, but today, thanks to profligate politicians concerned only about the next election, that gap has nearly quadrupled. Increases in social programs and, especially, the prescription drug expansion bill President George W. Bush signed into law in 2003, have accelerated the country’s fiscal gap to mind-numbing size.