True U.S. Debt Tops $210 Trillion
“The true US debt is 16 times larger than what the government reports.” That’s what Boston University professor Laurence Kotlikoff and Mercatus Center research fellow Adam Michel calculate in a new report titled, “Closing America’s Enormous Fiscal Gap: Who Will Pay?” According to their research, “The US government has a long-standing habit of understating the severity of its fiscal condition, because estimators weigh fiscal sustainability over limited time periods. When measured properly — over an infinite time horizon — the difference between all projected future government spending and all projected future government revenue and resources over time is $210 trillion, far greater than the $13 trillion usually cited.” A disparity that large coupled with Congress’ penchant for expanding rather than reforming — much less cutting — existing programs means massive tax increases would be necessary to close the gap. “The true fiscal gap is 12 times the size of the US economy, and about 10.5 percent of the present value of all future US GDP,” add Kotlikoff and Michel. “To eliminate the shortfall solely through tax increases, the government would have to immediately and permanently raise all federal taxes — personal and corporate income taxes, excise taxes, and Social Security taxes — by 58 percent.” Last fall the Congressional Budget Office reported that the budget deficit for FY 2014 was a relatively small $486 billion, but it also expects that number to climb back north of $1 trillion — courtesy of ObamaCare and retiring baby boomers. An oft-cited $13 trillion in unfunded liabilities sounds bad enough; but $220 trillion? That should be enough to scare even lawmakers. But will it?