President's Council of Economic Advisors Declare United States Government Bankrupt

The President's Council of Economic Advisors declared the United State's Federal Government to be bankrupt according to current definitions last Friday (February 4, 2005). According to the council, "Bankrupt means 'having insufficient assets to cover one's debts,'"1 . By this definition, the United State's Government has been bankrupted by President Bush, having gone from a surplus of $121 billion in fiscal 2001 to a deficit of $412 billion in fiscal 2004.



From the White House - CEA Memo on Social Security :

Bankrupt means "having insufficient assets to cover one's debts,"1 which applies to Social Security in 2042, according to the Social Security Trustees most recent report.2

A Small Business Analogy:

Consider a small business that has $750,000 in annual revenue and $1 million in annual costs, for a $250,000 annual loss. Obviously, that business would be able to stay open only as long as it has enough money in the bank to cover its losses. Once the money runs out, the business will be bankrupt. The business won't necessarily disappear, but to stay open it would have to restructure so that its revenues at least cover its costs.


1 www.Dictionary.com
2 Social Security Trustees Report, page 3