In a podcast with Russ Roberts, he says,
I think we are probably in worse fiscal shape and any developed country. The reason, Russ, is we’ve been piling up debts for over 6 decades; and when I say ‘we’ I’m referring to Republican and Democratic administrations and Congresses. And we’ve been hiding them. We’ve been keeping them off the books and using economic labels, words, to pretend that they are not real liabilities of the government…we have all these obligations to something like 30-40 million current retirees and close to 80 million baby boomers who are about to start collecting Social Security benefits if they haven’t already. All those obligations are not reported as part of the government’s debt, so we are missing those off-the-book obligations.
But the real economic emergency is inequality. Or austerity. Or something.
They can just not pay them, remember. And that wouldn’t be disruptive. Just remember not to expect them. Expectations aren’t important.
It’s getting harder and harder to honor your blog tagline. I don’t think it’s us.
As in, when your opponent’s only goal is to destroy you…it’s tough.
Is it just conservatives are lazy or really innumerate?
Ummm, what?
That was both a great and scary podcast. The numbers are mind-boggling. Even more inexplicable are the people who claim that we have been in a period of deep austerity.
With the NSA I’m almost ready to say fuggit-about it. But what if we need austerity? What we need is a flame thrower economy paying down debts and repudiating unfinished d promises. Has that ever happened? Is it even possible?
During the debt ceiling debate we heard arguments that if the gov didn’t pay benefits then bond holders would worry they wouldn’t get paid. It was odd logic then because the point was to try to stay solvent by prioritizing valid debts. It is made even odds by the same people believing benefit promises of the not too distant future are negligible to the debt equation.
Russ was very kind not to bring it up but a couple of years ago Larry Kotlikoff tried to secure a spot on the Presidential Election ballot on the open source Americans Elect party line.
Frankly, considering the enormity of the financial challenges facing the United States, I would’ve campaigned for Kotlikoff with great enthusiasm.
What does it say about democracy that Kotlikoff’s candidacy was as politically implausible as it was urgently necessary?
This is a question of accounting. It is a common fallacy to seek to capitalize all of an entities future expenses while ignoring both its future revenue and the economic value of its off-balance-sheet assets. Either you bring everything onto the balance sheet at economic values, or you don’t. It is important to remember that the US does not publish a balance sheet, only a list of liabilities. The asset side, which has never been calculated, includes such properties as Alaska, Nevada and Fort Knox.
That’s a valid point. I can’t voucher for Kotlikoff’s figures, but if you listen to the podcast, he addresses your point in the first 5 minutes. Per Kotlikoff, the net present value of the total federal debt is $205 trillion, that is, net of the present value of future expected taxes. The CBO has it only at $50 trillion, which Kotlikoff contends is too low. I don’t think that the public lands in Alaska, Nevada and the gold at Fort Knox are worth even anything approaching the CBO’s estimate.
I bet Nevada is worth more than anyone realizes, the same with Alaska. They are currently not worth much because the government does practically nothing with the land. This is true of most Western States, and even Arkansas.