Financial Post | Opinion

Four reasons America cannot be rescued

In Tuesday’s Financial Times, well-known columnist Martin Wolf argues that “America’s fiscal policy is not in crisis.” “The federal government,” he writes,“is not on the verge of bankruptcy.” “This,” Wolf admits, “is a highly controversial statement.”

Indeed, many analysts believe that the U.S. federal government is bankrupt. They include, among others, economists Jeffrey Hummel of San Jose State University and Laurence Kotlikoff of Boston University. As early as 2006, Kotlikoff wrote an article in the journal of the Federal Reserve Bank of St. Louis, asking the question “Is the United States Bankrupt,” to which he answered affirmatively.

Even official government agencies such as the Congressional Budget Office (CBO) and the Government Accountability Office (GAO), which have each produced scenarios of their own, are less optimistic than the Financial Times columnist. Besides their optimistic scenarios, which they admit are themselves unsustainable, each agency produces…

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