John Williams - The US Government is Insolvent

With the US government reporting financials, it seemed important to turn to John Williams of ShadowStats for an honest breakdown. John had this to say, “For 2010, gross federal debt was 94% of GDP, and total federal obligations were 443% (official) or 529% (alternative) of GDP, depending on the number used. The difference, though, is not material, as either ratio leaves the U.S. government insolvent over the long haul.

John Williams:


“2010 GAAP Accounting Shows Ongoing Unsustainable and Uncontainable Annual Federal Deficits. Against an official quasi-cash-basis reporting of a $1.294 trillion 2010 federal budget deficit, which narrowed from a $1.417 trillion shortfall in 2009, the 2010 Financial Report of the United States Government showed a GAAP-based 2010 deficit of $2.080 trillion, which widened from $1.254 trillion in 2009.


...Broader GAAP-based federal deficits, including the Social Security and Medicare unfunded liabilities, have been in the $4 trillion to $5 trillion range in 2008 and 2009, and 2010’s deficit again likely was near $5 trillion, remaining both uncontainable and unsustainable. The federal government cannot cover such an annual shortfall by raising taxes, as there are not enough untaxed wages and salaries or corporate profits to do so. On the spending side, all government spending, except Social Security and Medicare could be cut, but the broad GAAP results still would be in deficit. (more)