Here’s one for you to put in your pipe to smoke on. Even if the U.S. were to seize the wealth of the entire planet, and even if we taxed all the wealth of not only the rich but the miserably poor as well, we STILL couldn’t pay off the debts that Democrats demand that we keep adding to until after we’ve reached that “straw that broke the camel’s back” point:
True U.S. debt exceeds world GDP by $14 trillion
Obama 2010 budget deficit now 5 times larger than nation’s output
Posted: March 21, 2011
By Jerome R. Corsi
As the Obama administration prepares to finance a Fiscal Year 2011 budget deficit expected to top $1.6 trillion, the American public is largely unaware that the true negative net worth of the federal government reached $76.3 trillion last year.
That figure was five times the 2010 gross domestic product of the United States and exceeded the estimated gross domestic product for the world by approximately $14.4 trillion.
According to the U.S. Department of Commerce Bureau of Economic Analysis, U.S. GDP for 2010 was $14.861 trillion. World GDP in 2010, according to the International Monetary Fund, was $61.936 trillion.
“As government obligations continue to spiral out of control and the U.S. government shows no willingness to make the magnitude of spending cuts required to return to fiscal responsible, the U.S. economy is headed to a great collapse coming in the form of a hyper-inflationary great depression,” says economist John Williams, author of the website Government Shadow Statistics.
Statistics generated in Williams’ most recent newsletter demonstrate the real 2010 federal budget deficit was $5.3 trillion, not the $1.3 trillion previously reported by the Congressional Budget Office, according to the 2010 Financial Report of the United States Government as released by the U.S. Department of Treasury Feb. 26, 2010.
The difference between the $1.3 trillion “official” 2010 federal budget deficit numbers and the $5.3 trillion budget deficit based on data reported in the 2010 Financial Report of the United States Government is that the official budget deficit is calculated on a cash basis, where all tax receipts, including Social Security tax receipts, are used to pay government liabilities as they occur.
The calculations in the 2010 Financial Report are calculated on a GAAP basis (Generally Accepted Accounting Principles) that includes year-for-year changes in the net present value of unfunded liabilities in social insurance programs such as Social Security and Medicare.
Under cash accounting, the government makes no provision for future Social Security and Medicare benefits in the year in which those benefits accrue.
“The broad GAAP-based federal deficits, including the Social Security and Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range in 2008 and 2009, and 2010’s deficit again likely was near $5 trillion, remaining both uncontrollable and unsustainable,” Williams wrote.
“The federal government cannot cover such an annual shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so,” he warned.
In his analysis of the 2010 Financial Report of the United States, Williams listed both an official accounting and an alternative.
“The estimate of a broad 2010 GAAP-based deficit at $5 trillion is mine,” he noted. “At issue with the published report, consistent year-to-year accounting was not shown, with a large, one time reduction in reported 2010 Medicare liabilities, based on overly optimistic assumptions of the impact from recently enacted health care legislation.”
U.S. Government GAAP Accounting Federal Budget Deficits U.S. Treasury, Financial Report of the United States, 2002-2010 (John Williams, Shadow Government Statistics, ShadowStats.com)
Williams argues the total U.S. obligations, including Social Security and Medicare benefits to be paid in the future, have effectively placed the U.S. government in bankruptcy, even before we take into consideration any future and continuing social welfare obligations that may be embedded within the Obama administration’s planned massive overhaul of health care.
“The government cannot raise taxes high enough to bring the budget into balance,” Williams said. “You could tax 100 percent of everyone’s income and 100 percent of corporate profits and the U.S. government would still be showing a federal budget deficit on a GAAP accounting basis.”
Williams argues the U.S. government has condemned the U.S. dollar to “a hyperinflationary grave” by taking on debt obligations that will never be covered by raising taxes and/or by severely slashing government spending that has become politically untouchable.
“Bankrupt sovereign states most commonly use the currency printing press as a solution to not having enough money to cover obligations,” he cautioned. “The U.S. government and the Federal Reserve have committed the system to its ultimate insolvency, through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, gross mismanagement, and a deliberate and ongoing effort to debase the U.S. currency.”
He is concerned that the Federal Reserve will supplement its current policy of Quantitative Easing 2, or QE2, under which the Fed intends to purchase by mid-year 2010 another $600 billion of Treasury debt with “QE3.”
“These actions (QE2 and QE3) should pummel heavily the U.S. dollar’s exchange rate against other major currencies,” he concludes. “Looming with uncertain timing is a panicked dollar dumping and dumping of dollar-denominated paper assets, which remains the most likely event as a proximal trigger for the onset of hyperinflation in the near-term.”
Williams predicts that the early stages of hyperinflation will be marked by an accelerating upturn in consumer prices, a pattern that has already begun to unfold in response to QE2.
“For those living in the United States, long-range strategies should look to assure safety and survival, which from a financial standpoint means preserving wealth and assets,” he advises.
Williams suggests that physical gold in the form of sovereign coins priced near bullion prices remains the primary hedge in terms of preserving the purchasing power of the dollar, as well as stronger major currencies such as the Swiss franc, the Canadian dollar and the Australian dollar.
And as totally insane as that is, it might well even be worse than that.
$61.936 trillion sounds like a lot. And that’s the official figure for the International Monetary Fund’s estimate for U.S. indebtedness. But the IMF is giving credibility to a figure that makes that $62 trillion seem almost manageable:
I Can Give You 200 Trillion Reasons Why We Need To Cut Government Spending NOW
By Michael Eden March 7, 2011
Republicans are trying to get our spending under control, and Democrats are demonizing them every single step of the way. Because Democrats are demons, and demonizing is the only thing they know how to do.
For the record, Republicans are trying to cut an amount which is basically 1/30th of Obama’s budget deficit.
News from globeandmail.com
The scary real U.S. government debt
Wednesday, October 27, 2010
Ottawa — firstname.lastname@example.org
Boston University economist Laurence Kotlikoff says U.S. government debt is not $13.5-trillion (U.S.), which is 60 per cent of current gross domestic product, as global investors and American taxpayers think, but rather 14-fold higher: $200-trillion – 840 per cent of current GDP. “Let’s get real,” Prof. Kotlikoff says. “The U.S. is bankrupt.”
Writing in the September issue of Finance and Development, a journal of the International Monetary Fund, Prof. Kotlikoff says the IMF itself has quietly confirmed that the U.S. is in terrible fiscal trouble – far worse than the Washington-based lender of last resort has previously acknowledged. “The U.S. fiscal gap is huge,” the IMF asserted in a June report. “Closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 per cent of U.S. GDP.”
This sum is equal to all current U.S. federal taxes combined. The consequences of the IMF’s fiscal fix, a doubling of federal taxes in perpetuity, would be appalling – and possibly worse than appalling.
Prof. Kotlikoff says: “The IMF is saying that, to close this fiscal gap [by taxation], would require an immediate and permanent doubling of our personal income taxes, our corporate taxes and all other federal taxes.
“America’s fiscal gap is enormous – so massive that closing it appears impossible without immediate and radical reforms to its health care, tax and Social Security systems – as well as military and other discretionary spending cuts.”
He cites earlier calculations by the Congressional Budget Office (CBO) that concluded that the United States would need to increase tax revenue by 12 percentage points of GDP to bring revenue into line with spending commitments. But the CBO calculations assumed that the growth of government programs (including Medicare) would be cut by one-third in the short term and by two-thirds in the long term. This assumption, Prof. Kotlikoff notes, is politically implausible – if not politically impossible.
One way or another, the fiscal gap must be closed. If not, the country’s spending will forever exceed its revenue growth, and no one’s real debt can increase faster than his real income forever.
Prof. Kotlikoff uses “fiscal gap,” not the accumulation of deficits, to define public debt. The fiscal gap is the difference between a government’s projected revenue (expressed in today’s dollar value) and its projected spending (also expressed in today’s dollar value). By this measure, the United States is in worse shape than Greece.
Prof. Kotlikoff is a noted economist. He is a research associate at the U.S. National Bureau of Economic Research. He is a former senior economist with then-president Ronald Reagan’s Council of Economic Advisers. He has served as a consultant with governments around the world. He is the author (or co-author) of 14 books: Jimmy Stewart Is Dead (2010), his most recent book, explains his recommendations for reform.
He says the U.S. cannot end its fiscal crisis by increasing taxes. He opposes further stimulus spending because it will simply increase the debt. But he does suggest reforms that would help – most of which would require a significant withering away of the state. He proposes that the government give every person an annual voucher for health care, provided that the total cost not exceed 10 per cent of GDP. (U.S. health care now consumes 16 per cent of GDP.) He suggests the replacement of all current federal taxes with a single consumption tax of 18 per cent. He calls for government-sponsored personal retirement accounts, with the government making contributions only for the poor, the unemployed and people with disabilities.
Without drastic reform, Prof. Kotlikoff says, the only alternative would be a massive printing of money by the U.S. Treasury – and hyperinflation.
As former president Bill Clinton once prematurely said, the era of big government is over. In the coming years, the U.S. will almost certainly be compelled to deconstruct its welfare state.
Prof. Kotlikoff doesn’t trust government accounting, or government regulation. The official vocabulary (deficit, debt, transfer payment, tax, borrowing), he says, is vulnerable to official manipulation and off-the-books deceit. He calls it “Enron accounting.” He also calls it a lie. Here is an economist who speaks plainly, as the legendary straight-shooting film star Jimmy Stewart did for an earlier generation.
But Prof. Kotlikoff’s economic genre isn’t the Western. It’s the horror story – “and scarier,” one reviewer of his book suggests, than Stephen King.
It’s isn’t a matter of IF America will financially collapse; it is only a matter of WHEN. And “WHEN” is SOON.
And it will necessarily happen because Democrats are genuinely depraved.
Recklessly spending money on fools’ projects that your grandchildren will become debt slaves just trying to pay the interest on is immoral.
I can only keep begging Republicans to turn the Democrats’ demonization game back at them. Democrats are running around on their talking points denouncing Republicans as “extremists” who want to kill poor people.
It is DEMOCRATS (I call them “Demoncrats,” for “Demonic Bureaucrats”) who want to implode America and kill tens of millions of American people by plunging this country into a great depression that will make the last one in the 1930s seem like a fun-filled day at the beach.
It’s not going to be the richest people who starve to death and die miserably in the cold. It’s going to be all the people liberals love to say they care about – when in reality all they do is cynically manipulate them toward their own increasingly certain doom.
Don’t you dare forget that it has been LIBERALS who have been dreaming of undermining and imploding America financially since Cloward and Piven back in the 1960s. And now we’ve got a JUST-ex SEIU official on tape plotting to send America into a financial crisis that will dwarf anything ever seen.
If you have a true death wish, and you vote Democrat, then by all means keep doing so, because they will give you the destruction and nihilism that you seek. That’s the real meaning of Obama’s “hope and change.”