This is one reason why socialism doesn't work.......

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http://www.worldnetdaily.com/index.php?fa=PAGE.view&pageId=88851

MONEYNETDAILY
Federal obligations exceed world GDP
Does $65.5 trillion terrify anyone yet?

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Posted: February 13, 2009
11:35 pm Eastern


By Jerome R. Corsi
© 2009 WorldNetDaily


As the Obama administration pushes through Congress its $800 billion
deficit-spending economic stimulus plan, the American public is largely unaware
that the true deficit of the federal government already is measured in
trillions of dollars, and in fact its $65.5 trillion in total obligations
exceeds the gross domestic product of the world.

The total U.S. obligations, including Social Security and Medicare benefits to
be paid in the future, effectively have placed the U.S. government in
bankruptcy, even before new continuing social welfare obligation embedded in
the massive spending plan are taken into account.

The real 2008 federal budget deficit was $5.1 trillion, not the $455 billion
previously reported by the Congressional Budget Office, according to the "2008
Financial Report of the United States Government" as released by the U.S.
Department of Treasury.

The difference between the $455 billion "official" budget deficit
numbers and
the $5.1 trillion budget deficit cited by "2008 Financial Report of the United
States Government" is that the official budget deficit is calculated on a cash
basis, where all tax receipts, including Social Security tax receipts, are used
to pay government liabilities as they occur.

But the numbers in the 2008 report are calculated on a GAAP basis ("Generally
Accepted Accounting Practices") that include year-for-year changes in the net
present value of unfunded liabilities in social insurance programs such as
Social Security and Medicare.

Under cash accounting, the government makes no provision for future Social
Security and Medicare benefits in the year in which those benefits accrue.

"As bad as 2008 was, the $455 billion budget deficit on a cash basis and the
$5.1 trillion federal budget deficit on a GAAP accounting basis does not
reflect any significant money [from] the financial bailout or Troubled Asset
Relief Program, or TARP, which was approved after the close of the fiscal
year," economist John Williams, who publishes the Internet website Shadow
Government Statistics, told WND.

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"Obama Nation"

"The Congressional Budget Office estimated the fiscal year 2009 budget deficit
as being $1.2 trillion on a cash basis and that was before taking into
consideration the full costs of the war in Iraq and Afghanistan, before the
cost of the Obama nearly $800 billion economic stimulus plan, or the cost of
the second $350 billion in TARP funds, as well as all current bailouts being
contemplated by the U.S. Treasury and Federal Reserve," he said.

"The federal government's deficit is hemorrhaging at a pace which threatens the
viability of the financial system," Williams added. "The popularly reported
2009 [deficit] will clearly exceed $2 trillion on a cash basis and that full
amount has to be funded by Treasury borrowing.

"It's not likely this will happen without the Federal Reserve acting as lender
of last resort for the Treasury by buying Treasury debt and monetizing the
debt," he said.

"Monetizing the debt" is a term used to signify that the Federal
Reserve will
be required simply to print cash to meet the Treasury debt obligations, acting
in this capacity only because the Treasury cannot sell the huge of amount debt
elsewhere.

The Treasury has been largely dependent upon foreign buyers, principally China
and Japan and other major holders of U.S. dollar foreign exchange reserves,
including OPEC buyers purchasing U.S. debt through London.

"The appetite of foreign buyers to purchase continued trillions of U.S. debt
has become more questionable as the world has witnessed the rapid deterioration
of the U.S. fiscal condition in the current financial crisis," Williams noted.

"Truthfully," Williams pointed out, "there is no Social
Security 'lock-box.'
There are no funds held in reserve today for Social Security and Medicare
obligations that are earned each year. It's only a matter of time until the
public realizes that the government is truly bankrupt and no taxes are being
held in reserve to pay in the future the Social Security and Medicare benefits
taxpayers are earning today."

Calculations from the "2008 Financial Report of the United States
Government"
also show that the GAAP negative net worth of the federal government has
increased to $59.3 trillion while the total federal obligations under GAAP
accounting now total $65.5 trillion.

The $65.5 trillion total federal obligations under GAAP accounting not only now
exceed four times the U.S. gross domestic product, or GDP, the $65.5 trillion
deficit exceeds total world GDP.

"In the seven years of GAAP reporting, we have seen an annual average deficit
in excess of $4 trillion, which could not be possibly covered by any form of
taxation," Williams argued.

"Shy of the government severely slashing social welfare programs, federal
deficits of this magnitude are beyond any hope of containment, government or
otherwise," he said.

"Put simply, there is no way the government can possibly pay for the level of
social welfare benefits the federal government has promised unless the
government simply prints cash and debases the currency, which the government
will increasingly be doing this year," Williams said, explaining in more detail
why he feels the government is now in the process of monetizing the federal
debt.

"Social Security and Medicare must be shown as liabilities on the federal
balance sheet in the year they accrue according to GAAP accounting," Williams
argues. "To do otherwise is irresponsible, nothing more than an attempt to hide
the painful truth from the American public. The public has a right to know just
how bad off the federal government budget deficit situation really is,
especially since the situation is rapidly spinning out of control.

"The federal government is bankrupt," Williams told WND. "In
a post-Enron
world, if the federal government were a corporation such as General Motors, the
president and senior Treasury officers would be in federal penitentiary."