“The unfunded obligations dwarf the current national debt: Social Security currently has $22.4 trillion in unfunded obligations and Medicare has $52.8 trillion.[17] [18] With an additional $78.2 trillion in unfunded obligations on top of the $34 trillion and growing national debt, as a result future generations of taxpayers will be faced with large tax burdens and fewer policy options.”
08/15/24
Dollar Doubts Dominate Gathering of Global Economic Leaders
Participants at the I.M.F and World Bank meetings this week reckoned with the prospect that the U.S. safe haven could lose its luster.
By Colby Smith
Reporting from Washington
On the sidelines of the spring meetings of the International Monetary Fund and World Bank this week, Treasury Secretary Scott Bessent tried to convey an important message about the United States dollar.
To: Interested Parties
I have served as a career employee in five Presidential Administrations, including service as the Assistant Director of OMB.
The federal deficit is increasing at such a rate that it is highly probable that the United States will go into bankruptcy. When such an event occurs the normal response of a national government is to issue additional currency with the debilitating impact of massive inflation.
It should be noted that managing a private firm is focused primarily on making a profit; managing the United States government is focused on providing services to a very diverse public. The largest firm in the private sector (April 2025) has revenues of 1.4 billion; the federal government spends 16.9 billion per day.
The skills in each of the aforementioned sectors might be complementary, but it is questionable whether they are interchangeable.
The aforementioned observations should be given consideration when choosing those who are to lead a program for restructuring the federal debt:
CRE has taken a position on the bankruptcy of the United States government, if not opposed by the US financial community, most certainly has not endorsed by it.
That said, CRE does have three individuals who agree with its position on the forthcoming bankruptcy of the United States government.
The above ranking from beginning with the earliest to the most recent statement on the issue.
The Center for Regulatory Effectiveness (CRE) has been a student of the increasing federal debt for decades. Recently it has concluded that the the United States is on its way to an irreversible bankruptcy.
Historically other nations, when confronted with such an event, simply issue additional currency with the resultant impact of catastrophic inflation. CRE is in support of a different alternative–restructuring of the national debt. Restructuring of debt is commonplace in the private sector but less common in the public sector, particularly at the national level. The restructuring program advocated herein is probably the first of its kind because it incorporates many of the principles and programs traditionally used in Notice and Comment rulemakings.
Reproduced from QUORA
Jim Tozzi
Former Assistant Director at Office of Management and (1972-1982)
Ray Dalio warns debt crisis is ‘imminent’ Fortune
Implementation
A close read of the this link demonstrates that there is little chance that a sitting President will admit that the US is on a track to bankruptcy. [NB In theory the US Government will never go into bankruptcy because it will simply print more currency and allow rabid inflation take its toll.] The real question is whether a party leader would announce in the off season that conventional Debt Restructuring accompanied by:
Former Assistant Director –Office of Management and Budget (OMB) (1972–1982)
The Center for Regulatory Effectiveness has concluded that the United States government in on an irreversible path to bankruptcy.
In its opinion the primary choice is whether the nation adopts the conventional policy of printing more currency which leads to hyper-inflation or instead takes immediate steps to develop an action plan for restructuring the US national debt.
In doing so special recognition should be accorded to the degree of income inequality in the US. We finally identified a study published nearly three decades ago which addresses our concern in that it concludes that: “Our most striking finding is that higher income inequality is a significant predictor of a higher probability of debt rescheduling in a cross-section of middle-income countries.”
