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Thursday, August 12, 2010

Professor Laurence J. Kotlikoff Says USA Is Essentially Bankrupt

Professor Laurence J. Kotlikoff from Boston University.
Laurence J. Kotlikoff, Professor of Economics at Boston University, recently made the following statement in the editorial section of Bloomberg News:

"Let’s get real. The U.S. is bankrupt. Neither spending more nor taxing less will help the country pay its bills. What it can and must do is radically simplify its tax, health-care, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalize the economy."

The article to which I am now referring was entitled: "U.S. Is Bankrupt and We Don't Even Know It," and it went into great detail regarding our current national predicament. Nor, did he make such dire statements without providing substantial evidence for openly doing so. For instance, Professor Kotlikoff pointed out the International Monetary Fund's own recent annual review of United States economic policy - which essentially pronounced America bankrupt and noted that our Federal Government would have to double our various rates of: Personal, Income, and Corporate Taxation, in order to achieve a sustainable financial balance.

Although this massive hike in Federal Taxation seems somewhat drastic to most Americans, considering our current debt load of $14 trillion dollars and our current annual budgetary deficits of only a few trillion more each year, the International Monetary Fund - like the Congressional Budget Office - must also include the almost $100 trillion dollars in unfunded debt obligations relevant to Social Security and National Health Care obligations currently guaranteed to American Taxpayers. Let's face it, folks, we all knew that these days were coming - decades ago - but no-one had the political will to address the underlying financial issues involved. Instead, we've been thinking up new ways to make them even bigger.

Meanwhile, with 14.9 percent of our Gross Domestic Product already being consumed by our Federal Government, we may fully expect another 14 percent slice of this economic pie being turned over to this same and totally inept political leadership through a euphemistically named Value Added Tax [or, VAT Tax] within the next two years. In point fact: The Federal Reserve, Congressional Budget Office, and United States Treasury are already lubricating the gears in Washington for its imminent political implementation! At which point, 29 percent of our entire GDP [one third of it] will be under absolute Federal Control.

If this doesn't scare you, then it should... because: Local, County, and State Taxation will continue to consume between 30 and 40 percent of the rest - in order to meet the truly necessary services of government, upon which we must continue to honestly rely! Thus, between 60 and 70 percent of all American Economic Production will be greedily consumed by our government under such blatantly confiscatory fiscal measures. Moreover, the majority of them will continue to fall upon America's already struggling "Middle Class" - either through: direct methods of taxation [like the VAT Tax], or indirectly passed on through the higher consumer prices charged by our modern corporations.

Of course, these fanciful IMF Calculations are being based upon the assumption that such a massive new level of taxation will not unduly affect [or impact] the overall national economy. Since such an assumption is patently preposterous, we must also factor in the "Greece Like" Austerity Measures, which will be: necessarily, broadly, and simultaneously imposed - during this very same long term period of past due governmental economic enslavement. It is even quite conceivable, that our currently massive Federal Safety Net will be significantly curtailed in the very near future.

Moreover, the [seemingly] huge Budgetary Surpluses, which shall be generated in the political short term - in order to necessarily offset these long term societal obligations and expenditures - will prove to be a powerful temptation to a seriously hurting public and their completely amoral political leadership. Since when, in recent history, has our leadership even attempted to run a budgetary surplus? And yet, they will be required to do so for decades - while the American citizenry is largely suffering the ongoing effects of a Global and Domestic Economic Depression. The IMF also states, that the longer our country waits to impose these extremely tough [but necessary] measures, the more painful these fiscal adjustments will need to be.

These are the very real consequences of spending money - for numerous decades - that doesn't [quite honestly] exist! At some point, Economic Reality catches up with everyone who continually ignores it. Alas, for The United States of America, that time is now! Our enlightened ancestors repeatedly exclaimed, that: "There is no such thing as a totally Free Lunch..."  and, with such Common Sense sayings as these, they had hoped to inoculate us from the social diseases inherent in Popular Democracy. The Real American Truth - when honestly given - is merely that, "In A Nutshell."

1 comment:

  1. I have to say, you do a very good job of presenting real American truth. But have you not heard the expression "kill the messenger" or do you just choose to ignore it? Consider yourself on the hit list...

    By choosing to focus on only certain aspects that, when taken by themselves rather than as part of the whole, people tend to get a somewhat misleading impression. The American government is not totally stupid and inept as many like to think. Why is the mounting debt of America's economic situation of no concern to those who are "in the know"? You are a man of knowledge and wisdom, do you not admit that other changes that are coming, to a large degree, make this not merely a moot point but a necessary prerequisite? Let's face it, as bumpy and painful as it may be for some (or many), is it not a vital piece of the plan as a whole?

    I say lighten up a bit - and enjoy the ride, because like everything in life - it doesn't last forever and regardless of whether you believe you have paid up front or not, you will most certainly be paying, with interest, in the end.


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