EXPENDITURE REQUIRED TODAY [2004 NUMBERS] TO
ACHIEVE GENERATIONAL BALANCE IN U.S. FISCAL POLICY
A financial and social disaster that will occur in your lifetime . . .
Policy Percentage Change
Increase Federal Income Taxes +69%
Increase Payroll Taxes +95%
Cut federal purchases -100%
Cut Social Security & Medicare -56%
These numbers are from 2004 – three years ago – in Niall Ferguson’s Colossus: The Rise and Fall of the American Empire, pages 270-271. The numbers are from a study done by Jagadeesh Gokhale, a senior economist at the Federal Reserve Bank of Cleveland, and Kent Smetters, the former deputy assistant secretary of economic policy at the U.S. Treasury..
The numbers above represent Gokhale’s and Smetters’ assessment of how much taxes would have to be raised, or expenditures cut – immediately and permanently, to pay off future expenditure commitments, including interest on the national debt.
The difference between expenditure commitments and expected revenues is based on 2004 numbers and added up to $45 trillion – an amount roughly four times the nation’s total output (GDP). It’s also an amount 12 times the nation’s official debt in 2004 – a number that’s significantly higher now.