Zimran adds context—i.e. the way the government accounts for deficits—to Niall Ferguson's view that the United States is fiscally overstretched: “the government uses cash accounting to measure its deficits -- that is, it looks at the difference between cash coming in (through taxes) and cash going out (through spending) to calculate whether it is running a surplus or not. But it is obvious that this is a useless way of looking at a government's fiscal position because they have made commitments far in the future, and the cost of those commitments should be accounted for. Here, I'm talking about social security and Medicare -- two entitlement programs so large that they dwarf whatever paltry "deficit" or "surplus" that blips around the cash accounting system the government uses today.”
A Useless Way Of Looking At A Government's Fiscal Position
