Friday, August 20, 2010

Why the US is as Busted as a Busted Flush

Why the US is as busted as a busted flush – Blogs
And you thought we’d got problems here in the UK. Have a read of this terrifying article by Professor Laurence Kotlikoff of Boston University, which using recent IMF analysis pretty convincingly demonstrates that the US is as fiscally bankrupt as a busted flush. No wonder stock markets are in meltdown again.

I have to confess to missing this at the time of publication, but apparently the IMF in its “selected issue paper” on the US economy calculates that “closing the fiscal gap requires a permanent annual fiscal adjustment equal to about 14 percent of U.S. GDP.” As Professor Kotlikoff notes, the entire Federal tax base amounts to 14.7 per cent of GDP, so to close the gap from a revenue perspective would require the authorities to double the rate of taxation in the US.

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