Blink! U.S. Debt Just Grew by $11 Trillion
by Laurence Kotlikoff and Scott Burns, Bloomberg.com, 8/8/12. They co-wrote the book The Clash of Generations: Saving Ourselves, Our Kids, and Our Economy, published this year by MIT Press.
Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.
In the course of that year, the U.S. governments fiscal gap -- the true measure of the nations indebtedness -- rose by $11 trillion.
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.
Some question whether official and unofficial spending commitments can be added together. But calling particular obligations official doesnt make them economically more important. Indeed, the government would sooner renege on Chinese holding U.S. Treasuries than on Americans collecting Social Security, especially because the U.S. can print money and service its bonds with watered-down dollars.
(...)
The U.S. fiscal gap, calculated (by us) using the Congressional Budget Offices realistic long-term budget forecast -- the Alternative Fiscal Scenario -- is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference -- this years 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 fantastic and dangerous growth in the fiscal gap is not new. In 2003 and 2004, the economists Alan Auerbach and William Gale extended the CBOs 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.
full: http://www.bloomberg.com/news/2012-08-08/blink-u-s-debt-just-grew-by-11-trillion.html
Progressive dog
(6,918 posts)I'm glad they're so good at predicting the future.
blkmusclmachine
(16,149 posts)Smoke and mirrors. DC Magic. Same Sh!t Different Day. Etc.
Operation Northwoods
Mosaic
(1,451 posts)They owed the equivalent of 222 trillion, or perhaps a little more give or take a trillion.