David Walker, former US Comptroller General, is very active warning the US citizenry of the dangers of rising budget deficits. His sponsored Sovereign Fiscal Responsibility Index (SFRI) is a new fiscal indicator that incorporates a wide range of fiscal, economic and political factors into ranking a country's fiscal responsibility and sustainability.
A full description of the index and findings is linked here.
The SFRI found that the most fiscally responsible countries are not the ones one would generally expect, including Australia and New Zealand as the front runners. Four of the top 10 in this index are emerging markets. Not surprisingly, Portugal, Italy, Ireland, Greece, Spain and Japan are ranked near the bottom of the list.
The United States is ranked number 28 out of the 34 countries analyzed. Assuming no reforms are made, the study found that the United States will hit its debt ceiling in 2027 - 16 years from now. However, the U.S. is set to enter the fiscal danger zone in two to three years and a debt crisis could come suddenly thereafter.
Importantly, when the data is re-analyzed, inserting the proposals from President Obama's National Fiscal Responsibility and Reform Commission, the U.S. moved up 20 spots to number eight.
The SFRI is the result of a Master's Thesis project completed by a team of Stanford University graduate students under the guidance of the Hon. David M. Walker, the former Comptroller General of the United States.
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