Does GM Foreshadow What Will Happen To The United States Government?

Bond guru Bill Gross says:

Perhaps the most significant comparison between GM and the U.S. economy lies in the recognition of enormous unfunded liabilities in healthcare and pensions. Reportedly $1500 of every GM car sold in dealer showrooms goes to pay for current and future health benefits of existing and retired workers, a sum totaling nearly $60 billion. The total future healthcare liability for all U.S. citizens can be measured in the tens of trillions.

GM’s pension and this country’s social security liabilities are of similar magnitudes. While GM’s plan is currently fully funded, the necessity for future contributions, especially if investment return assumptions are not met, are substantial. “I have a social security system hooked to our balance sheet,” admits GM CFO Fritz Henderson. Since America’s existing social security scheme is for all intents and purposes a “pay as you go” funding plan, the U.S. balance sheet is tipped even more to the liability side.

How are we to pay for this future burden of healthcare and social security expenses? Aside from contractual legislative changes to both areas (which are surely just around the corner), the way a reserve currency nation gets out from under the burden of excessive liabilities is to inflate, devalue, and tax.

The city of Detriot,the country of France,General Motors,and the United States goverment have things in common.