While public focus on the government's massive debt burden has faded a bit in recent months, it remains a huge problem, says Ron Haskins, an economist at the Brookings Institution.
"Of all the failures of recent Congresses and Presidents, none is more important than their failure to deal with the nation's long-term debt," he writes in an article for Real Clear Markets
"Although Congress tied itself in knots trying to address the problem, the growth of debt remains, in the words of the Congressional Budget Office, 'unsustainable.'"
When the Great Recession began in 2007, the federal government's debt totaled about 40 percent of GDP. But that ratio surged to 78 percent of GDP in 2013.
"The annual deficit is now declining at a stately pace, but by 2016 it will begin increasing again," Haskins explains. Debt will jump to well over 100 percent of GDP by 2039, according to a conservative estimate by the Congressional Budget Office.
"But little if any congressional action is planned to deal with the notorious level of debt," Haskins writes. "We're headed toward a fiscal black hole."
Boston University economist Laurence Kotlikoff
is concerned too. To those who say the government debt is easily manageable, he has a sobering reply.
"Our country is broke. It's not broke in 75 years or 50 years or 25 years or 10 years. It's broke today," Kotlikoff told the Senate Budget Committee in February. "Indeed, it may well be in worse fiscal shape than any developed country, including Greece."
And what about official figures showing that federal government debt is "only" 74 percent of GDP? "Unfortunately, the federal debt is not an economic measure of anything, including our nation's fiscal position," Kotlikoff said.
For example that figure omits the almost $750 billion the government is collecting this year in Social Security payroll taxes from workers and the future Social Security transfer payments these FICA contributions secure, he explains.
In reality we're facing a fiscal gap of $210 trillion Kotlikoff contends. That's almost 12 times current GDP of $18 trillion.
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