Recommended: Why the Debt Crisis Is Even Worse Than You Think

Back in July of 2011, Peter Coy wrote a relevant piece in Bloomberg Businessweek entitled Why the Debt Crisis Is Even Worse Than You Think. It is well worth reading. Coy argues that the debt real number to look at is not the currently-owed debt (about $14 trillion when the article was written, about $16+ trillion right now), but rather the future gap between revenue and liabilities.  That number, he argues, is about $211 trillion.

In November of 2012 Chris Cox and Bill Archer wrote a piece in the Wall Street Journal: Why $16 Trillion only Hints at the True U.S. Debt. They point out that the government uses all sorts of accounting tricks, which no normal business would be allowed to use, to distort (lie about) the true national current and future liability, which they estimate at $86.8 trillion just for Social Security and Medicare.  As they point out, to cover just this liability, the government would need something like $8 trillion per year in tax revenue.  If you took ALL the taxable income of US citizens, plus ALL the taxable income of US corporations, that would only net about $6.7 trillion per year, not enough to cover the liabilities.

The point? Just to substantiate the point I made in my last post -- the US debt is now so great that there is no way we can ever pay it off, and so we will have to default on much of it one way or another. Of course it would be political suicide for either party to actually simply default on the debt, so they will have to do it by a combination of inflation, higher taxes, reduced government spending and reducing promised entitlements and pensions, all of which will produce a great deal of political theater and strife.