Professor Laurence Kotlikoff: Our Government Is Broke – CBO Admits “True Liabilities”
True Deficit Kept Off the Books, Like Enron
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Jim welcomes back Laurence J. Kotlikoff, Professor of Economics at Boston University. Professor Kotlikoff focuses on the CBO (Congressional Budget Office) and it’s Extended Baseline Forecast, which was left out of discussions during the recent budget debate. The CBO admits to true liabilities of $205 trillion. “Our government is broke” said Kotlikoff, “and the press is clueless and doing its best to hide the truth from the public.” Looking at the CBO's extended baseline projections beyond 10 years gives a more realistic picture of our fiscal outlook since it accounts for harmful effects of debt on the economy, as well as lower levels of savings and revenue than projected otherwise. Kotlikoff stressed that unless we act soon, radical measures will have to be taken in the future. “In terms of generational accounting, were we to leave our kids and future descendants to cover the entire fiscal gap, they’d face tax rates over their lifetimes around twice as high as those we face” said Kotlikoff.