A ballooning budget deficit and a pensions and welfare timebomb could send the economic superpower into insolvency, according to research by Professor Laurence Kotlikoff for the Federal Reserve Bank of St Louis, a leading constituent of the US Federal Reserve.
Prof Kotlikoff said that, by some measures, the US is already bankrupt. “To paraphrase the Oxford English Dictionary, is the United States at the end of its resources, exhausted, stripped bare, destitute, bereft, wanting in property, or wrecked in consequence of failure to pay its creditors,” he asked.
According to his central analysis, “the US government is, indeed, bankrupt, insofar as it will be unable to pay its creditors, who, in this context, are current and future generations to whom it has explicitly or implicitly promised future net payments of various kinds”.
It seems not all is lost, if people start voting for someone other than the current crop of fiscally irresponsible bobble-heads:
Paul Ashworth, of Capital Economics, was more sanguine […] “This can be contained if the political will is there. Similarly, the expected increase in social security spending can be controlled by reducing the growth rate of benefits. Expecting a fix now is probably asking too much of short-sighted politicians who have no incentives to do so. But a fix, or at least a succession of patches, will come when the problem becomes more pressing.”
Or, we’ll just come crashing down really hard with a side-helping of police state crackdowns on everyone who suddenly stops getting a benefits check each month, which seems more likely if you consider the knee-jerk reaction our republicrats tend to have.
Update: In related news, Raw Story caught president George Bush talking out of his ass when he ceremoniously claimed victory over the budget:
The reduction of the budget deficit to $296 billion, touted by President George W. Bush in a White House ceremony yesterday, will be completely reversed by 2007, RAW STORY has learned.
A report in today’s Wall Street Journal shows that by 2007, the budget deficit will rise to $339 billion. The projection was offered by the White House’s own Office of Management and Budget, the source of yesterday’s numbers on deficit reduction.