Study: America’s Real Fiscal Gap is $211 trillion, 35% Chance of Default Within 30 Years

By James Pethokoukis

This new fiscal study—from Richard W. Evans and Kerk Phillips of Brigham Young University and Laurence Kotlikoff of Boston University—is worrisome, to say the least:

Most developed countries appear to be running unsustainable social policies. In the U.S., federal liabilities (official debt plus the present value of projected non-interest expenditures) exceed federal assets (the present value of projected taxes) by $211 trillion or 14 times GDP. Closing this fiscal gap requires an immediate and permanent 64 percent hike in all federal taxes. … Our simulations, calibrated to the U.S. economy, produce an average duration to game over of about one century, with a 35 percent chance of reaching the fi scal limit in about 30 years. … When our economy reaches game over, the government is forced to default on its promised payment to the contemporaneous elderly.

Read the rest here.