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.

Author: Mark Kleiman

Professor of Public Policy at the NYU Marron Institute for Urban Management and editor of the Journal of Drug Policy Analysis. Teaches about the methods of policy analysis about drug abuse control and crime control policy, working out the implications of two principles: that swift and certain sanctions don't have to be severe to be effective, and that well-designed threats usually don't have to be carried out. Books: Drugs and Drug Policy: What Everyone Needs to Know (with Jonathan Caulkins and Angela Hawken) When Brute Force Fails: How to Have Less Crime and Less Punishment (Princeton, 2009; named one of the "books of the year" by The Economist Against Excess: Drug Policy for Results (Basic, 1993) Marijuana: Costs of Abuse, Costs of Control (Greenwood, 1989) UCLA Homepage Curriculum Vitae Contact: Markarkleiman-at-gmail.com