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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (747008)	8/7/2006 11:10:35 AM
From: TimF	Read Replies (2) \| Respond to of 769670

The liabilities are the real story, not the official deficit. The deficit and debt level would be quite manageable if we didn't have all the other liabilities. They are a bit different from GM's liabilities in that most of them aren't contractual. Congress could just change the law and the liabilities would just go away. Of course the political reaction to that would be harsh, and I don't think its going to happen. Another factor is that the law calls for reducing payouts if the funds are not available. We could start now by not raising payouts as fast as they where scheduled to increase, and no nominal dollar cuts (and perhaps no cuts in inflation adjusted dollars) would be needed. However there is no real political will for that right now. If we wait until the automatic cuts kick in they will be a lot more harsh, and perhaps the law will be changed to cancel the automatic cuts, and instead have the social security and medicare programs borrow the money, either directly through some bonds for those programs, or by having the US treasury borrow the money to give to the entitlement programs. Either way its a lot of extra debt.