What 'debt' do *I* 'owe?
- Absent a VALID means of 'consent' we need not acknowledge the legitimacy of this govt 'debt' any more than do the people of a third world country in which the dictator absconded with IMF money.
I no more 'owe' this debt than I 'owe' a vagrant money for foisting upon me a traffic stop windshield 'washing' (smearing) 'service'
I will pay only what I'm coerced into paying; and to me that is 'theft'
-Terry Liberty Parker
----- Original Message -----
To: "tonie nathan"
Sent: Wednesday, May 21, 2003 1:54 AM
Subject: Boston Globe on 5/19/2003.
An economic 'menu of pain'
By Laurence J. Kotlikoff and Jeffrey Sachs, 5/19/2003
OUR GOVERNMENT is going broke. The feds face bills that are far beyond our
capacity to pay -- by $44 trillion to be precise. The longer we ignore them,
the bigger they get. Yet President Bush is working overtime to deepen our
fiscal trap. This $44 trillion figure is not ours. Nor is it some other
academics' calculation. It was produced last fall by economists and budget
analysts at the US Treasury, the Federal Reserve, the Office of Management
and Budget, and the Congressional Budget Office. The study was ordered by
then Treasury Secretary Paul O'Neil and was slated to appear in the
president's budget, released in February.
O'Neil instructed his team, led by Jagadeesh Gokhale, Federal Reserve senior
economist, and Kent Smetters, then deputy assistant secretary for economic
policy at the Treasury, to answer the following question: Suppose the
government could, today, get its hands on all the revenue it can expect to
collect in the future, but had to use it, today, to pay off all its future
expenditure commitments, including debt service net of any asset income.
Would the present value (the value today) of the future revenues cover the
present value of the future expenditures?
The answer is no, and the fiscal gap is the $44 trillion. Now, that is big
bucks by anyone's definition. It's four times current GNP and 12 times
official debt. Imagine everyone in the country working for four years and
handing over every penny earned to pay this bill, and you'll grasp its size.
Unfortunately, we can't asc ribe the $44 trillion calculation to overly
pessimistic assumptions. On the contrary, the assumptions are optimistic
with respect to future longevity as well as growth in federal health
expenditures, discretionary spending, and labor productivity.
Gokhale and Smetters asked a follow-up question: By how much would taxes
have to be raised or expenditures cut on an immediate and permanent basis to
generate, in present value, the $44 trillion? Their ''menu of pain'' is
mind-boggling. Entree A is raising federal income tax collections
(individual and corporate) by 69 percent. Entree B is raising payroll tax
collections by 95 percent. Entree C is cutting Social Security and Medicare
benefits by 56 percent. Entree D is cutting federal discretionary spending
by more than 100 percent, which, of course, is not feasible. Combination
platters are also available. For example, we might select quarter portions
of entrees A through D. But no matter what combination we order, digesting
this medicine is going to be plenty painful.
Why are the nation's fiscal affairs in such a mess? The reason is
straightforward. Baby boomers are just five years from starting to collect
Social Security retirement benefits and eight years from starting to collect
Medicare benefits. When all 76 million boomers are retired, we'll have twice
the number of elderly beneficiaries, but only 15 percent more workers to pay
If the fiscal gap and its associated menu of pain are unfamiliar, there's a
reason. You can scour the thousands of pages of the president's FY 04
budget, and you won't find the analysis. It never made it in. When Secretary
O'Neill was replaced last December, the analysis was yanked from the budget.
To be clear, limiting our need to know is not just a Republican
responsibility. When it came to publishing a generational accounting
analysis in the FY 92 budget, P resident Clinton's political watchdogs
overruled OMB and pulled the same trick. And bankrupting has been a
collective effort of all postwar administrations, each of which has cared
more about the next election than the next generation.
Our current team leader, President Bush, is doing his part. Taken together,
his first tax cut and his proposed second tax cut, which is about to be
passed by Congress, account for roughly a sixth of the fiscal gap. The
president, an ardent believer in voodoo economics, is convinced his tax cuts
will stimulate growth and dramatically raise revenues. Neither economic
theory nor economic facts supports this view. In fact, the president is not
only burying us in explicit and implicit debt, he's undermining the
economy's future performance.
The stakes are now too high for more political games and flaky economic
theories. Democrats and Republicans alike need to send our leaders a firm
message: Deal r esponsibly with the coming generational obligations! If we
don't, we can look forward to massive cuts in future Social Security and
Medicare benefits, tax hikes, high inflation, and bitter political strife.
Putting aside the president's latest tax cut would be an excellent start on
the road to responsibility.
Laurence J. Kotlikoff is chairman of the Department of Economics at Boston
University. Jeffrey Sachs is professor of economics at Columbia University.
This story ran on page A11 of the Boston Globe on 5/19/2003.
© Copyright 2003 Globe Newspaper Company.
[Non-text portions of this message have been removed]