:: blame the extended gestation.... ::

:: Monday, January 12, 2004 ::

"I.M.F. Says Rise in U.S. Debts Is Threat to World’s Economy
Elizabeth Becker and Edmund L. Andrews
New York Times, January 8, 2004, Page A1

"With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to a report released Wednesday by the International Monetary Fund. "

From Economic Reporting Review by Dean Baker:

"This article reports on a new study by the I.M.F., which warns that the U.S. budget and current account deficits could create serious instability in the world economy if they are not soon brought under control. At one point it refers to a projection that shows the size of the long-term U.S. budget deficit as $47 trillion. This figure is reported as being “nearly 500 percent of the current gross domestic product in the coming decades.”

The $47 trillion figure is the present discounted value of future deficits. It is nearly 500 percent of this year’s gross domestic product, but it would be more reasonable to compare it to the present discounted value of future GDP. This deficit is equal to approximately 6.5 percent of the present discounted value of future GDP, which implies that a tax increase equal to 6.5 percent of GDP would leave the budget in balance. Such a tax increase would leave tax rates in the U.S. somewhat lower than the average for rich countries.

It is also important to note that approximately three quarters of this projected deficit is attributable to rising private sector health care costs, which affect the federal budget through Medicare, Medicaid, and other government health care programs. If the U.S. found a way to successfully contain its health care costs -- as has every other industrialized nation then most of the projected $47 trillion deficit would be eliminated "

:: Jim Nichols 1/12/2004 01:19:00 PM [+] ::
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