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Comment by espeed | Hacker News Reader

A quote from the article...

“Some of our senior politicians and market pundits say it every day: “America is broke.”

"We wonder if this is meant to be a joke. America is not even close to being broke. Household net worth is $57T. Public government debt – including the state and local sector – is about $12T. If we consolidate balance sheets to reflect the fact that the household sector is ultimately responsible for repaying this debt we arrive at a household net worth of $45T or 303% of GDP. This is at the high-end of the historical norm of 250- to 300% since the data began in 1952. The current level was surpassed only in the recent tech stock and housing bubbles."

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Back in 2009, it was estimated that t Total US financial obligation is around 65 Trillion. Recently i read somewhere that the figure is excess of 100 Trillion now !

src: http://www.wnd.com/index.php?fa=PAGE.view&pageId=88851

And the 2011 Federal budget is estimated to be [1]:

Revenue: $2.17T

Expenditure: $3.82T

Deficit: $1.65T

So, $12T public debt aside, it's growing at a rate of about 12% per year, the government is spending almost twice as much as it's bringing in and much of that expenditure is mandated rather than discretionary.

This doesn't even account for other debts the US government, such as the Social Security debt of current and future retirees.

Something has to give and there is no political will to do it. I see two likely outcomes:

1. Raising the retirement age to 70 or even higher; and

2. Introducing a national consumption (sales) tax.

[1]: http://en.wikipedia.org/wiki/2011_United_States_federal_budg...

See the discussion here: http://news.ycombinator.com/item?id=2476584

Sales taxes are a really inefficient way of raising money. More specifically, you end up extracting most of your income from the poor and the middle-class, rather than the wealthy.

We already have a fair way of levying a tax - it's the proportional income tax and it's done just fine in the past. You'd be amazed how those numbers change if you remove the Bush tax cuts from the budget (or, even more shocking, go back to Reagan-era income tax levels).

I, for one, would rather raise taxes to their old levels than do away with government services that I value and that my friends and family depend on. My salary is pretty damn healthy - I would be "unfairly" taxed at a high bracket. That's the way it should be.

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