BUT WHAT’S A MERE $20 TRILLION AMONG FRIENDS?
Peter Fisher, Undersecretary of the Treasury for domestic finance, says that on a present-value basis the Federal government is $20 trillion in the red. (That’s about 2 years’ worth of GDP.)
“Think of the federal government as a gigantic insurance company with sideline business in national defense and homeland security,” Mr. Fisher said. It counts premiums and payouts as they come and go and worries little about how to pay claims in the future. “This particular insurance company, it turns out, has made promises to its policyholders that have a current value $20 trillion or so in excess of the revenues that it expects to receive,” he said.
“An insurance company with cash accounting is not really an insurance company at all,” he added. “It’s an accident waiting to happen.”
Brad DeLong provides a link to the original Wall Street Journal article, and some commentary.
Max Sawicky explains why the Republicans are so willing to play the “train wreck” game with the federal fisc: If you goal is depressing domestic spending, it works.