Ignored by most politicians, David Walker, who heads the Government Accountability Office (GAO), is taking his message on tour. His presentation on the unsustainability of the U.S. economy can be viewed on YouTube.
The biggest contributor to the coming fiscal meltdown is the Medicare prescription drug benefit.
Boston University professor Laurence Kotlikoff asks the question “Is the United States Bankrupt?” in a paper published in the Federal Reserve Bank of St. Louis Review, July/August 2006.
“[W]e have a country at the end of its resources. It’s exhausted, stripped bear (sic), destitute, bereft, wanting in property, and wrecked (at least in terms of its consumption and borrowing capacity) in consequence of failure to pay its creditors,” Kotlikoff writes, paraphrasing the Oxford English Dictionary. “In short, the country is bankrupt and is forced to reorganize its operations by paying its creditors (the oldsters) less than they were promised.”
Mike Adams predicts that the United States will play the Ace up the sleeve. “It’s the Ace that all governments eventually play on their way to bankruptcy and collapse”: hyperinflation (NewsTarget.com 7/17/06).
Massive tax increases are likely to trigger major supply-side responses of the type that have not yet arisen in this country, Kotlikoff notes. For example, Uruguay, with very high net tax rates, has lost more than 500,000 young and middle-aged workers, largely from the nation’s best educated citizens, to Spain and other countries in recent years.
The longer Washington persists in denial, the worse the ultimate outcome, Walker warns.