Global Financial Crisis=Minnow. Entitlements Crisis=Whale.
Ted Bromund /
That’s a bit of an exaggeration. No serious person can deny the importance of the global financial crisis. We can only hope that the U.S. and Britain don’t get swept away by its urgency and agree to a lot of European and Russian proposals that would make it worse, and themselves poorer and less sovereign.
But as bad as the financial crisis is, it’s not nearly as bad as the coming entitlements one. That’s the message the IMF, in its latest paper on “The State of Public Finances: Outlook and Medium-Term Policies After the 2008 Crisis,” says that governments have not come to terms with. The IMF doesn’t have a lot to contribute to resolving the current crisis, but it’s on target about the looming one.
The measures the U.S. has taken so far to respond to the fiscal crisis are going to cost a lot of money. The IMF expects that, on net present value basis – that is, the deflated total of all future costs – they will amount to about 34% of the US’s GDP. Except for Spain, which is on the hook for 35%, the US’s package is the most burdensome. (more…)