Skip to comments.4 Takeaways From a New Report on the National Debt
Posted on 06/26/2019 11:53:25 AM PDT by Tolerance Sucks Rocks
A new government report has given us a glimpse into our nations fiscal future, and the outlook is grim. Absent major reforms, Americas debt will only continue to balloon.
The Congressional Budget Office released its updated long-term budget report on Tuesday, which projects the nations fiscal situation for the next 30 years.
Despite the strong economy, the nation remains in a precarious and unsustainable budget position, just as it was last year. Debt held by the public is set to rise to nearly one and a half times the size of the economy in the coming decades.
The report also highlights the high stakes of issues sitting before Congressnamely, whether or not lawmakers pass another budget deal to raise spending caps for fiscal year 2020 and beyond.
The current proposal put forth by House Democrats would raise spending by at least $357 billion over two years, driving long-term debt even higher.
The bottom line is this: If Congress is to avoid a debt crisis, it must implement strong spending restraints now. The first step is to reject the deal proposed by House Democrats. Instead, Congress ought to prioritize essential federal functions, like national defense, and cut wasteful and duplicative domestic programs that the federal government should have no role in.
Over the long term, cuts to discretionary spending wont be enough to stabilize the debt.
The true drivers of debt are our major entitlement programs: Social Security, Medicare, and Medicaid. Reforming these programs is essential if the country is to avoid a debt crisis and preserve these programs for the long term.
Here are four key takeaways from the report:
(Excerpt) Read more at dailysignal.com ...
Gosh, it's remarkable how this wasn't a problem during the eight years Obama was in power.
This made it pretty clear years ago (it’s also hilarious):
Thank God for Central Banking and Credit Money, we can just Print all we Need!
The national debt is a problem a printed pile of three billion $10,000 bills can deal with, and will.
The National Debt. Lets assume for a moment the morons in DC wanted to get serious about repayment of the debt.
And decided to throw One Billion Dollars per day at the Debt.
Great. But that would only pay the interest.
The 21 TRILLION DOLLARS in principal still remains.
That’s why we should all get free college, health care, and a free latte from starbucks everyday. Because we can already easily afford all the bullshT our government over promises and under-delivers
Be prepared to live like Greeks in 2014, but the food here will suck (if you can find any) and the climate will be a bit warmer than you’re used to.
Don’t worry about traffic jams after the great printing, they’ll be no more gas available.
Air conditioning? None?
Heating? Whose’s been stealing my pine needles?
We have a huge conflict of interest for Congresscritters. They deficit spend, borrowing money in the markets to finance the spending. Then they steal the borrowed money from the Swamp hog-trough, enriching themselves even more. The vast majority of them need to be arrested . . . pack of thieves
“prioritize essential federal functions, like national defense”
The Communists are already here and apparently running the governments of the USA.
Eat your own squirrels, not mine.
If we just continue to print money, put more money in circulation, eventually we will have tremendous inflation.
I expect that to happen at some point. All promised Social Security benefits will be paid. But someone’s $2,000 per month Social Security payment may only buy a loaf of bread at that point, depending how bad the inflation is.
There is no political will to ever really deal with the national debt.
“I’m betting on the latter because we’ve literally become Too Big to Fail at this point. The rest of the world cannot survive our collapse, so they have no alternative than to let us go on printing money and pretend that it has value.”
The rest of the world will get along without us.
A few tourists might show up and our kids will do the Third World begging routine. They won’t miss any school, the schools will simply be housing for unpaid government workers.
You can find out how the US debt compares to other countries, too.
We’re about $22 trillion in debt. Since LBJ declared War on Poverty, we’ve spent approximately $22 trillion on it.
It’s important to understand, the principle will never be paid off, and that there was never any intent to pay it off. They simply borrow more or refinance.
What they must do though, is continue to make timely interest payments. Even during the Civil War, the US government didn’t miss any interest payments. Come what may, they have to do this. If you’re wondering what happens if they have to make a choice say, between paying foreign creditors and making Social Security or “Welfare” payments - you get one guess. Because, if they miss interest payments, then the costs to borrow in the future go up. Way up. Game Over.
At some point the interest payments become too unwieldy. One of the things that happened under the Clinton administration, they started rolling over long term government obligations into short term securities. As I understood it a few years ago, the entire US Government debt - all of it -now rolls over every 4 years or thereabouts. Consequently everything is extremely interest rate sensitive.
How the US government is able to continue to borrow at such low rates I’ve never understood. But, if interest rates were to ever revert to even nominal historical rates, it’s Game Over. Even just a 1/4 point rise in rates means an “extra” 50 or 100 Billion dollars of interest payments on the debt, something like that. So 4.5%, 6%, 8% rates - BOOM!
In the 1970s the Federal Reserve chairman Paul Volcker raised the overnight rates to something like 18%. monetary inflation was picking up steam, and they had to do something. It worked, although caused a recession and wiped out thousands of jobs.
Nobody is going to raise interest rates ever again. They can’t. That’s what it looks like to me anyway. Basically they have a choice, they can save the dollar, or save the markets, though not both. Politically, virtually every government chooses to “print”, or debase the currency when things get sideways.
Another twist is the fact that the US dollar is a “reserve currency”. This is a legacy of when the American dollar was based on a fixed quantity of gold. For many years Oil around the world was not only denominated in dollars, it needed to be purchased in dollars. If France or Germany or Great Britain wanted to buy oil from Venezuela, they had to convert (buy) their dollars first, then buy the oil.
So an absolutely huge number of dollars lived more or less permanently outside America, used whenever a foreign country X wanted to buy oil from foreign country Y. In theory this is not inflationary, since those dollars don’t come home to the US.
Anyway when things go Tango Uniform, and eventually they will, it will likely happen virtually or literally overnight. There’s no way for the average person to predict this, though one thing to be sure, they won’t wait give fair warning ahead of time. They’ll just pull the plug and we’ll hear “Nobody Could See This Coming, Unprecedented, Uncharted Waters” blah blah.
It’s not looking good though, simply because of the outright brazen in-your-face criminality we’ve been seeing at the highest levels of governmen for the last several years. They are apparently betting it won’t matter, they won’t be held to account, and maybe they are correct.
You make an excellent point. And so when idiots start in on demanding reparations - they need to be reminded:
They already got them.
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