Monday, June 29, 2009

Congressional Budget Office: Debt Tsunami

The Debt Tsunami - "To put it bluntly, the fiscal policy of the United States is unsustainable. 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.

This huge mass of debt, which would stifle economic growth and reduce the American standard of living, can be avoided only through spending cuts, tax increases or some combination of the two. And the longer government waits to get its financial house in order, the more it will cost to do so, the CBO says."

There is no way the national government will reach those debt levels, which are not only unsustainable but impossible, because at that point nobody will buy our bonds. Long before the federal government hits that level, our creditors--including the Chinese--will have forced the US government into virtual receivership and will be dictating our policies, on pain of no more lending.

And a government that out of control will cripple the economy. If we get this cap and trade policy, along with national health insurance, energy prices and tax rates will go so high that this recession will never end. The state and local governments are raising taxes already, and soon the higher federal taxes will suck up even more private revenues.

1 comment:

Fred Pilot said...

There's a DVD out titled "IOUSA" that discusses the growing level of national debt. And BTW Wednesday is IOU Caleeforneeya day when the state will begin issuing IOU to pay some bills.