Posted on 07/10/2015 6:05:02 PM PDT by E. Pluribus Unum
(CNSNews.com) – Testifying in the U.S Senate yesterday, Congressional Budget Office Director Keith Hall warned that the publicly held debt of the U.S. government, when measured as a percentage of Gross Domestic Product, is headed toward a level the United States has seen only once in its history—at the end of World War II.
To simply keep the debt at the high historical level where it currently sits—74 percent of GDP–would require either significant increases in federal tax revenue or decreases in non-interest federal spending (or a combination of the two).
Historically, U.S. government debt as a percentage of GDP hit its peak in 1945 and 1946, when it was 104 percent and 106 percent of GDP respectively.
In 2015, the CBO estimates that the U.S. government debt will be 74 percent of GDP. That is higher than the 69-percent-of-GDP debt the U.S. government had in 1943—the second year after Pearl Harbor.
By 2039, CBO projects, the debt will increase to 101 percent of GDP and by 2040 to 103 percent GDP.
At that point, Hall told the Senate Homeland Security and Governmental Affairs Committee, the “debt would still be on an upward path relative to the size of the economy.”
While the run up in debt as a percentage of GDP in the 1940s financed a global war against Nazi Germany and Japan that ended with an allied victory, the current run toward unprecedented debt is based on projected increases in mandatory federal spending for entitlement programs. These include Social Security, Medicare, Medicaid and Obamacare subsidies.
“Mainly because of the aging of the population and rising health care costs, the extended baseline projections show revenues that fall well short of spending over the long term, producing a substantial imbalance in the federal budget,” Hall said in his written testimony.
“As a result, budget deficits are projected to rise steadily and, by 2040, to raise federal debt held by the public to a percentage of GDP seen at only one previous time in U.S. history—the final year of World War II and the following year,” he said.
“Moreover,” he said, “debt would still be on an upward path relative to the size of the economy. Consequently, the policy changes needed to reduce debt to any given amount would become larger and larger over time. The rising debt could not be sustained indefinitely; the government’s creditors would eventually begin to doubt its ability to cut spending or raise revenues by enough to pay its debt obligations, forcing the government to pay much higher interest rates to borrow money.”
Eventually, the nation would face a crisis—with wary investors demanding “much higher interest” rates to buy U.S. government debt.
“How long the nation could sustain such growth in federal debt is impossible to predict with any confidence,’ testified Hall. Keep reading
Debt is 10x gdp right now.
Why worry, like Greece we’ll just hope a larger country will bail us out! (There won’t be one.)
All I can say is that it is a good thing the interest rate on the debt can never go up.
Not sure what it will take to wake up this ignorant, self-indulgent slumbering people...
We are ripe, ripe, RIPE for a little suffering and judgement...
This should do it!
It’s the spending stupid.
The black family has been destroyed by welfare ( no man in the house) and government subsidy of illegitimate children leading to a 70% illegitimacy rate. I wonder if reductions in welfare and enforced parental responsibility could save the black family?
Besides welfare, the government needs to make spending cuts, especially in the area of personnel expenses. Allowing federal workers to unionize has led to government workers having greater job security, pay and benefits than are available for the private sector. The weight of the government is crushing the private sector, something our founders warned about long ago.
It’s the voter, stupid.
Also we're fortunate the Chinese, Russians and Arabs aren't trying to destroy our reserve currency status... /s
Geez, would it happen already! Let’s get this over with!
Correction. We do know the date the crash will occur. The date a Republican is president and will be forced to deal with this mess. There is no way the Fed or Treasury Dept. will let a crash happen on Obama’s watch. Books will be cooked, numbers tweaked, unlimited printing, QE, and outright lies until Obama is out.
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