Public Participation

The mathematics of debt sustainability is based on the idea that the government’s primary surplus must equal the stock of outstanding public debt to GDP ratio multiplied by the difference between the real GDP growth rate and the effective real interest rate paid on existing debt. This is expressed mathematically as:

(Tt – Gt  PtYt) = (rt-gt)(Bt-1 Pt-1Yt-1 )

Here’s some related information about debt sustainability:

• Debt sustainability and fiscal space

If (r−g) is less than zero, debt is always sustainable, even if it increases it will eventually converge. However, if (r−g) is close to zero and the government runs a large primary deficit, debt may increase for a long time and converge to a very high level.

There are a significant number of models used to address the implementation and composition of the “Bankruptcy Initiative”, a strategy consisting of the actions that need to be taken to minimize the adverse effects of uncontrolled federal spending for the past half-century recognizing that it is likely that the existing financial system will vanish.

What is needed is for experts to analyze each of the models used to address the pending issues and make an informed decision as to their strengths and weaknesses. Below is an analysis of the Debt Sustainability Model based upon the work of a number of skilled practitioners.

The Editor has been using the term US government “bankruptcy” in terms of the events that are likely to occur in the next decade.  Technically the US government cannot go bankrupt because it can simply continue to print more currency; the more accurate term is “debt default”.

That said, one of the reasons we are in the current mess is that economists generally write for other economists, not the general public, and look where we landed!

Click to read Dr. Jim J. Tozzi’s initial entry in AMERICAN MEN AND WOMEN OF SCIENCE

Cato Institute

Yes, one can make a set of assumptions that would cast the future of the US economy in a somewhat positive stance. That said, the probability of all the necessary conditions occurring simultaneously is remote.

See this article which is in agreement with position of the Editor.

Editor

Is the US Going Broke? Not Remotely

In that we are addressing a new phenomenon which is likely to begin in the next decade real life data is not available. We expect the economic community to play a major role in this debate. However it should be noted that there is no particular profession that has a monopoly on expertise. To this end we are presenting the disciplined views of a non-economist to our readers consideration. [ To the extent there are any partisan views present in the aforementioned publication  they are strictly  the views of the Author and may or  may not reflect the views of the Editor.

The Editor was  instrumental in establishing OIRA, having served as the Assistant Director of OMB including working for five  consecutive presidential administrations.

He has been asked his views a number of times regarding proposals to reduce federal spending.  Here is  his response.

Although I spent the majority of my federal career in  regulatory review, I started in the field of budget review.  After a number of years I left budget review and moved to regulatory review.

 Why, because I concluded It virtually impossible to eliminate yearly budget deficits. I arrived at this conclusion because I divided shareholders into two classes; giveth and taketh.