The Debt Tsunami

washington post ^ | June 28, 2009

[Mount Athos]

THE CONGRESSIONAL Budget Office has a tough job: to provide America's lawmakers with a reality check on their tax and spending plans. 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 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.

The principal cause of long-term fiscal distress is the aging of the U.S. population, coupled with rising health-care costs -- which, together, will drive spending on Medicare, Medicaid and Social Security to new heights. Unchecked, federal spending on Medicare and Medicaid combined will grow from almost 5 percent of GDP today to almost 10 percent by 2035 -- and to more than 17 percent of GDP by 2080.

Like his predecessors, Mr. Obama is aware of this issue. Like them, he has promised a plan to deal with it. And like them, he has not come up with anything credible yet. It's time for that to change.

[Mount Athos]

edited to meet citation limits

[griswold3]

debt deflation theory...
History doesn’t repeat itself but people repeat history...

[Pessimist]

“..can be avoided only through spending cuts, tax increases or some combination of the two. “

So then, I predict a 1% reduction in spending increases, and a 20% increase in taxes on the greedy.

How’d I do? Can I apply for a position in the administration yet, or do I need to back my credentials up with $70k in tax arrearages?

:)

[MattinNJ]

Wait-the Washington Post put this out there????????????????

[secretagent]

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.

Don't forget inflation!