US Fiscal Gap $200Trillion – 10X Official Federal Debt $20Trillion

by Anthony B Sanders

The USA is in a “fiscal inferno”  where the fiscal gap is 10 times higher than the acknowledged public debt of over $20 trillion.

The fiscal gap is the present value difference between all projected future government spending obligations (including official debt service) and all projected future tax revenues. The “all” is key. The fiscal gap puts everything on the books. Since the fiscal gap is $200 trillion and the official debt is $20 trillion, Congress has kept $180 trillion of net liabilities off the books.

Unfortunately, America’s $200 trillion fiscal gap, which, scaled by GDP, is the largest of any developed country.  Closing it requires either an immediate and permanent 50 percent hike in all federal taxes or an immediate and permanent 33 percent cut in all federal spending. The longer we wait, the larger the required adjustment.

Economist Lawrence Kotlikoff measured the fiscal gap showing that the US has the world’s largest gap.

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And the longer we wait to correct the problem, the worse the problem becomes.

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Actually, President George HW Bush implemented fiscal gap accounting, but that was negated by President William J Clinton leaving the US in a fantasy land of fiscal denial.

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Disco inferno!

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