Thanks A Lot, Washington! The U.S. Debt Just Grew by $11 Trillion

09 Aug, 2012 by John Hawkins

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Republicans and Democrats spent last summer battling how best to save $2.1 trillion over the next decade. They are spending this summer battling how best to not save $2.1 trillion over the next decade.

In the course of that year, the U.S. government’s fiscal gap – the true measure of the nation’s indebtedness – rose by $11 trillion.

…The U.S. fiscal gap, calculated (by us) using the Congressional Budget Office’s realistic long-term budget forecast – the Alternative Fiscal Scenario – is now $222 trillion. Last year, it was $211 trillion. The $11 trillion difference – this year’s true federal deficit – is 10 times larger than the official deficit and roughly as large as the entire stock of official debt in public hands.

…The answer for the U.S. isn’t pretty. Closing the gap using taxes requires an immediate and permanent 64 percent increase in all federal taxes. Alternatively, the U.S. needs to cut, immediately and permanently, all federal purchases and transfer payments, including Social Security and Medicare benefits, by 40 percent. Or it can mix these terrible fiscal medicines with honey, namely radical fiscal reforms that make the economy much fairer and far stronger. What the government can’t do is pay its bills by spending more and taxing less. America’s children, whose futures are being rapidly destroyed, are smart enough to tell us this.

Hear that? It’s the sound of a reckoning that’s coming for this country. Tick, tick, tick, tick, tick, tick…