If this is true–and Kotlikoff is really only repeating what the International Monitary Fund and the Congressional Budget Office are saying–how does it affect you and me? Who owns this debt? (I believe it’s mostly Americans.) Will we pay off this debt? Or will we pass it on to our kids and grandkids? What changes in lifestyle will be required to clean this up? Are we willing to make the sacrifice?
“…the IMF has effectively pronounced the U.S. bankrupt. Section 6 of the July 2010 Selected Issues Paper says: “The U.S. fiscal gap associated with today’s federal fiscal policy is huge for plausible discount rates.” It adds that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.”
The fiscal gap is the value today (the present value) of the difference between projected spending (including servicing official debt) and projected revenue in all future years.” via U.S. Is Bankrupt and We Don’t Even Know It: Laurence Kotlikoff – Bloomberg.