A FISTFUL OF DOLLARS

Red ink on the government’s ledger may not be the topic du jour, but it’s destined for greater scrutiny by Mr. Market. The timing and the relevance is an open debate. Meantime, the dollar value of America’s future promises (primarily Medicare/Medicaid and Social Security) continues to rise. As your editor details in the current issue of Wealth Manager, the prospective deficit born of all future government promises stands at a staggering $64 trillion, according to one estimate. That’s several times larger than last year’s GDP of $13 trillion-plus. On the other hand, $64 trillion comes with several caveats, starting with the fact that it’s calculated as the total long-run claim for the infinite future that’s facing the federal government less the anticipated tax revenues. The sum also assumes a corporate-style accounting system for assessing the future financial demands on the government. Such a system, however, doesn’t really apply to Washington. Or does it? In any case, no one will be shocked to learn that the dire projection for debt noted above is far from universally accepted, which leaves a wide variety of predictions as to just how much red ink awaits. Regardless of your view, the details are worth reviewing if only as a starting point for debate and education. If you’re game, you can dive into the particulars here….