The Senate on Thursday is expected to pass another continuing resolution that will fund the government until April 8 and avert a shutdown. But that won't solve the need for a budget to fund the remainder of the fiscal year, much less address America's true fiscal woes, says Boston University economics professor Laurence Kotlikoff.
The ongoing budget debate in Washington is "really a food fight between Democrats and Republicans in order to shield what's going on, which is we are stealing from our kids," Kotlikoff says. "What these guys in Washington are doing is just wasting time."
As with Columbia's Jeffrey Sachs and many others on both sides of the political spectrum, Kotlikoff is frustrated with President Obama and Congress for bickering about relatively small portions of the budget while failing to deal with the true causes of the deficit.
Including projected payments for Social Security, Medicare, Medicaid and other entitlement programs, America's true budget gap is $202 trillion, or 14 times GDP, Kotlikoff says, citing CBO data. That's far worse than the 9% of GDP reported in 2010 and official projections of 90 percent of GDP in 2020.
Worse Than Advertised
America is in "worst fiscal shape than Greece, Ireland, Portugal" or just about any other developed economy, he says. "The unofficial debts are staggering. Our implicit debts, the ones hidden off the books by Enron accounting show a much worse picture than the official debt."
To close the federal budget deficit, the professor and author of Jimmy Stewart Is Dead, says the government could take the following steps:
- -- A) Immediately and permanently raise all taxes by 77%
- -- B) Immediately and permanently cut all government spending by 40%
- -- C) Some Combination of A & B
Kotlikoff also recommends the government adopt the Ryan-Rivlin health-care plan for all Americans, not just seniors, as we discuss in a forthcoming segment.
Unless and until D.C. politicians are willing to adopt such dramatic, controversial and (some say) draconian measures, "they might as well go home and tell us to leave the country or just print money out the wazoo to pay these bills and leave us with hyperinflation," he laments. "That seems to be the game plan."