Moral Outrage
Whew! God help us!

The IMF has declared the U.S. bankrupt

Neither spending more nor taxing less will help the U.S. pay its bills.

Last month, the International Monetary Fund released its annual review of U.S. economic policy, and 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 IMF is saying that closing the U.S. fiscal gap, from the revenue side, requires, roughly speaking, an immediate and permanent doubling of our personal-income, corporate and federal taxes as well as the payroll levy.

The IMF is saying the U.S. needs to run a huge surplus now and for many years to come to pay for the spending that is scheduled. It’s also saying the longer the country waits to make tough fiscal adjustments, the more painful they will be.

This is what happens when you run a massive Ponzi scheme for six decades straight. Our country is broke and can no longer afford no- pain, all-gain “solutions.”

[Excerpts of an article by Laurence J. Kotlikoff, a professor of economics at Boston University]

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