Out of My Mind

Randy Forsyth, Capitalist Tool (R) (so to speak), at barrons.com:

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President Bush trumpeted Tuesday that this year's federal budget deficit is projected to total only $296 billion, $127 billion less than the previous forecast from the Office of Management and Budget. Next year's shortfall is estimated to total $339 billion, down from the previous forecast of $354 billion.

David Stockman, the OMB head in the first Reagan Administration, was, in his words, "taken to the woodshed" for forecasting $200 billion deficits "as far as the eye can see." Allowing for inflation over the two decades, $200 billion in red ink then is about the same as $300 billion now. But in it's not just the value of the dollar that's been debased over time; so have our standards.

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The way to judge a nation's solvency is not to measure the cash inflow and outflow in any one year, as the government does it, but to examine the lifetime fiscal burdens on current and future generations, he writes. Based on that criterion and the work of Jagadeesh Gokhale and Kent Smetters, the current U.S. fiscal gap is $65.9 trillion! That's trillion with a "t" and Kotlikoff's exclamation point.

To put that in perspective, $65.9 trillion is more than five times gross domestic product and almost twice the size of national wealth.

The rest of the gore is here.

Actually, the situation is even worse than that....