Analysis of the US Fiscal Situation

After my recent visit to Kleiner Perkins to conduct an interview for my next book, I’ve decided to keep my finger more on the pulse of these brilliant people.  I note that the other day, KP partner Mary Meeker published an enormous (460 page) research report analyzing the financial situation of the USA as if it were a company.

“Weekend reading.  Depressing,”  wrote my friend who forwarded it to me.  That’s certainly an apt summary.  As the author concludes: “By the standards of any public corporation, USA Inc.’s financials are discouraging.”

I don’t compare my grasp on the situation to that of Meeker.  But I do point out that short-term spikes in federal spending as a function of GDP in times of financial upheaval (e.g., the 1930s) can be justified on the basis that without them, the economy simply has no chance whatsoever to recover.  One could argue that the financial meltdown of 2008 was, in fact, such an emergency.  It’s funny to me how seldom we ask what things would have been like in the absence of such stimulation.

However, the long-term entitlements represent a real problem, largely brought about by an aging population and skyrocketing healthcare costs.  We need a solution there, for sure.  But the current partisan bickering in Congress is equivalent to re-arranging the deckchairs on the Titanic.  The actual “reform” is just as good for the pharmaceutical and insurance companies whose lobbyists made it happen as the one it replaced.

If you want my suggestion, check this out.