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Economy
The Debt Tsunami
2009-06-29
Hat tip, Instapundit
THE CONGRESSIONAL Budget Office has a tough job: to provide America's lawmakers with a reality check on their tax and spending plans. Not surprisingly, the CBO's projections are not always received cheerfully. Both President Obama and leading congressional Democrats were less than thrilled when the CBO estimated that the costs of universal health coverage would be much higher than advertised. To be sure, projecting the cost of legislation involves making assumptions and constructing models that may or may not prove accurate 10 years down the road. Nonetheless, the CBO, with its tradition of scholarly independence, is the best available arbiter, and Congress must heed its numbers -- like them or not.
That's not how "Hope & Change" Messiah operates
Now comes the CBO with yet more news of the sort that neither Capitol Hill nor the White House is likely to welcome: its freshly released report on the federal government's long-term financial situation. To put it bluntly, the fiscal policy of the United States is unsustainable.
German Prime Minister Angela Merkel and the Chinese have been telling President Obama the same thing, the one as a friend, the other as the largest holder of our debt.
Ah, ours is a President to whom you don't 'tell' things ...
Debt is growing faster than gross domestic product. Under the CBO's most realistic scenario, the publicly held debt of the U.S. government will reach 82 percent of GDP by 2019 -- roughly double what it was in 2008. By 2026, spiraling interest payments would push the debt above its all-time peak (set just after World War II) of 113 percent of GDP. It would reach 200 percent of GDP in 2038.
Or USA will cease to exist
Or we'd repudiate the debt, or we'd inflate our way out of it.
An important warning from a fairly unbiased source. But long before 2038 the fools who attempted to take on the debt load for us will be out of office and in the political equivalent of a locked ward. Remember, most of the payouts in the current budget have not actually been disbursed yet (and therefore need not be) -- that was one of the complaints about its efficacy as an economic pump primer.
Posted by:g(r)omgoru

#8  It takes a Tank!

The cost of one Abrams Army tank could provide health care for an entire village for one year. Or new Escalades for an entire subdivision.
Posted by: Besoeker   2009-06-29 17:23  

#7  These projections are wildly optimistic, because they assume a recovery from the current collapse in government revenues (everywhere). Even where government revenues and spending were roughly in balance, large cuts in spending are required to avoid balloning debt.

Due to the wonders of compounding the crunch will come a lot sooner.

There is no avoiding large cuts in government spending everywhere. Which some of us see as a good thing.
Posted by: phil_b   2009-06-29 16:46  

#6  Politicians remuneration based on how much they lower the debt servicing costs would probably work best.
Posted by: Bright Pebbles   2009-06-29 13:55  

#5  be there so long as they do their job...
Posted by: JohnQC   2009-06-29 13:30  

#4  There is another way: Vote out BO next time around. Vote out the buffoons who are in Congress and replace them with people who are fiscally responsible. Vote them in with the clear understanding that they will so long as they do the job that they were sent there to do--rein in costs and spending. Also they need to quit ruining our economy.
Posted by: JohnQC   2009-06-29 13:30  

#3  There are only 3 ways out of the existing national debt:
(1) pay it off
(2) repudiate it
(3) devalue the currency
The first option is plainly impossible even now. 0's profligacy will only make things worse.
Posted by: Anguper Hupomosing9418   2009-06-29 12:32  

#2  But long before 2038 the fools who attempted to take on the debt load for us will be out of office and in the political equivalent of a locked ward.

There will be no blaming President Obama by then. He will have left office 5 years previous to this and retired to his koffee plantation in Kenya.
Posted by: Besoeker   2009-06-29 10:59  

#1  This is really scary stuff. Despite everything the CBO is telling us, the 0ne insists that any criticism of his plans for energy and health care reform are "misinformation".

If even one of the aforementioned plans are implemented, let alone both, how long will it take to undo the immense damage it will inflict upon our country? Or are we totally screwed not matter what we do?

Posted by: eltoroverde   2009-06-29 10:53  

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