For the Press
Tax Analysts' Martin A. Sullivan Predicts America's "Fiscal Collapse," Coming in Two Stages -- Column in This Week's <i>Tax Notes</i> Focuses on Stage One: Long-Term DecayNovember 1, 2010
FALLS CHURCH, VA — "It is undeniable that we are on the path to fiscal collapse," Marty A. Sullivan, a contributing editor to Tax Analysts, writes in the nonprofit's flagship publication, Tax Notes magazine.
"This decline will occur in two stages," Sullivan states. "First there is the decay as the swelling national debt wears away the economy's foundations and commits more and more future income to foreign creditors. We are already in stage one…"
"When government issues debt," Sullivan explains, "it uses private savings that otherwise could be used for productive new capital and technology. This results in reduced capital formation (both tangible and intangible), which in turn reduces productivity, wages, competitiveness, and economic growth."
Stage two, on which Sullivan will focus next week, is when the nation faces a full-blown economic crisis of "greater default risk, looming inflation, higher interest rates, declining growth, financial market instability, and an acceleration of government borrowing. They feed on each other."
Read Sullivan’s column this week.