I'm not sure bankrupt is a strong enough word to describe America's economic situation. The Congressional Budget Office now estimates that the gap between long term projected spending and projected revenue is $222,000,000,000,000.
Even now, at the edge of the abyss, no politicians, from either party, are proposing to take actions that are sufficient to effectively deal with the problem. I suspect that's because the cure for our problem is medicine the patient will never consent to take.
Blink! U.S. Debt Just Grew by $11 Trillion
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. government’s fiscal gap -- the true measure of the nation’s
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” doesn’t 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.
For its part, economic theory sees through labels and views a country’s official debt for what it is -- a linguistic construct devoid of real economic content. In contrast, the fiscal gap is theoretically well-defined and invariant to the choice of labels. Each labeling choice changes the mix of obligations between official and unofficial, but leaves the total unchanged.
Dangerous Growth
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 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.
Continued
http://www.bloomberg.com/news/2012-0...-trillion.html
The Real National Debt: 222 Trillion
