'War on Children" -- A Follow-up
In our August 26 Growls a few days ago, we cited last weekend's Mark Steyn column in which he argued that unlike the "wars" of the progressive Left, the real war is against children, going so far as to use the phrase fiscal child abuse. Since Steyn mentioned the work of Boston University economics professor Laurence Kotlikoff, we included several of Kotlikoff's columns at the end of the article.
Yesterday, I started reading The Clash of Generations by Mr. Kotlikoff and his colleague Scott Burns. Page 3 includes a discussion of what they refer to as the fiscal gap. If you think the economic outlook today is dour, check this:
"Thanks to six decades of incredibly profligate and irresponsible generational policy, we can declare, The United States is bankrupt.
"And the United States isn't bankrupt ten, thirty, or fifty years from now. It's bankrupt right now. Indeed, the United States may be in worse fiscal shape than Portugal, Ireland, Italy, Greece, or Spain (referred to as PIIGS), which are generally viewed as the developed world's worst fiscal basket cases.
"You won't learn this by looking at our nation's official debt. Our 70 percent debt (held by the public) to gross domestic product (GDP) ratio is lower than that of any of the PIIGS. Actually, it's less than half of Greece's ratio -- the PIIG that's supposedly in the hottest water. Unfortunately, our $11 trillion official debt is but a small fraction of our nation's true $211 trillion indebtedness, known as the fiscal gap. (Note 1.)
"Yes, you read that number right. Our fiscal gap -- the value in the present (the present value) of all our future spending obligations (including servicing the official debt), net of all our future tax receipts, is enormous. It is fourteen times our nation's GDP, its total output. It is twenty-two times the official debt that now has everyone's attention.
"Since the fiscal gap equals $211 trillion and the official debt equals $11 trillion, it's clear that our unofficial IOUs (unofficial spending commitments) overwhelm our official ones. Worse, they are growing rapidly. Yet these unofficial liabilities have been carefully kept off the government's books in a duplicitous accounting that goes far beyond Enron's and Bernie Madoff's wildest dreams. That's why most people know little or nothing about the true size of our problem." (emphases in the original)
Note 1. In a Bloomberg News column, dated August 8, 2012, the authors updated the fiscal gap, writing that it has grown another $11 trillion, and now totals $222.
Yet virtually all of the Congressional masterminds seem like lemmings headed towards the "fiscal cliff".
UPDATE (9/2/12): On page 33 of Clash of Generations, Kotlikoff/Burns note that the state and local governments fiscal gap is about $38 trillion, bringing the total fiscal gap to some $260 trillion. Seeming to intuitively sense the terrible economic news about inter-generational theft, on Tuesday, Rasmussen reported that "just 16% see a better future for today's children."