Wednesday, June 2, 2010

Look at the Gross

I’ve always been told “never to look at the gross” on my paychecks. By the time that taxes from local, state, and federal government come out I’ll be left with a (more) paltry net sum. But it turns out that the same complex accounting that makes me look only at the net should increase my attention to the government’s gross. According to recent presentations to the President’s Fiscal Responsibility Commission, the US now carries a debt burden in excess of 80 percent of GDP. Yet many experts continue to quote the more reasonable-sounding “debt held by the public”, which produces a debt to GDP ratio closer to 60 percent.

The net value on a paycheck on a government budget or debt level measures only the value of transactions today. For an individual worker this makes since, I expect to receive payments tomorrow but only if I keep working. Yet the government obligates itself to make payments to long-standing programs like Social Security and Medicare well into the future. These future obligations generate massive differences between gross and net debt levels.

As the figure below shows, the United States resembles other advanced economies in hidden gross debt.

Emerging economies have a lesser wedge between net and gross debt primarily because they have weaker social safety nets. Of course, the United States created it's safety nets in punctuated phases. Take for instance, the first Social Security beneficiaries who got very large benefits relative to their contributions. If an emerging market economy were to start such a program immediately it would of course radically alter the gross/net wedge

What separates the United States from both advanced and emerging markets is the sheer size of all debt. Within the IMF data, the United States ranks only behind Greece, Italy, Japan, and Belgium in its level of overall debt. In fact in 2010, IMF estimates show the US crossing the 90 percent threshold cited by Reinhart and Rogoff as a trigger for debt crises.

25 comments:

文佩齊華 said...

認清問題就等於已經解決了一半的問題。..................................................

SadeRa盈君iford0412 said...

謝謝您囉~~很好的經驗分享! ..................................................

MinB2139 said...

被人揭下面具是一種失敗,自己揭下面具卻是種勝利。...............................................................

溫淑芬 said...

來問個安,誰不支持這個部落格,我咬他. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

文群文群 said...

死亡是悲哀的,但活得不快樂更悲哀。.................................................................

孝仁家明 said...

在莫非定律中有項笨蛋定律:「一個組織中的笨蛋,恆大於等於三分之二。」......................................................................

秋娥秋娥 said...

成熟,就是有能力適應生活中的模糊。.................................................................

文婷文婷 said...

Hello~安安唷~很高興見到你哦!!............................................................

JasonBirk佳琪 said...

Poverty tries friends.............................................................

嘉剛青卉 said...

No garden without its weeds.............................................................

said...

一時的錯誤不算什麼,錯而不改才是一生中永遠且最大的錯誤............................................................

曹依潔曹依潔 said...

開懷幸福的生活,是每個人的夢想~~希望大家都能夠實現!...............................................................

美岑美岑 said...

廢話不多,祝你順心~^^............................................................

彥安 said...

你不能改變容貌~~但你可以展現笑容............................................................

RicoLisi0802志竹 said...

生命所經歷的折磨愈多,其所產生的奮鬥力愈大。............................................................

毛彥宇毛彥宇 said...

Thanks a lot for sharing (o>▽<)............................................................

家唐銘 said...

快樂,是享受工作過程的結果..................................................

建邱勳 said...

一個人的價值,應該看他貢獻了什麼,而不是他取得了什麼....................................................

建邱勳 said...

憂能傷身,保重哦!............................................................

偉曹琬 said...

這一生中有多少人擦肩而過?而朋友是多麼可貴啊!......................................................................

易強青易強青易強青 said...

nice job! waiting for your new artical.............................................................

阿袁袁袁袁華 said...

時間就是靈魂的生命。................. ................................................

1615 said...

心平氣和~祝你也快樂~~..................................................

洪勳劉耀德劉耀德華 said...

及時行樂-快樂不需要理由............................................................

盛春成 said...

人生就像一顆核桃,必須敲破它,才會顯出他的內容。..................................................... ............