Finally, U.S. debt load raises red flags
Earlier this week the Congressional Budget Office (CBO) warned that the nation’s debt load is at a dangerously high level. In fact, by September 2012, our country’s debt will amount to 70 percent of the nation’s gross domestic product (GDP). Not since World War II has our debt to GDP been that high.
If the CBO is raising the red flag, not the yellow caution flag, but the danger signal, what are the leaders of the country doing to rein in the growing debt? Well, so far, the administration of President Barack Obama has not presented a budget that has passed the House of Representatives or Senate. The House of Representatives, controlled by the Republicans has been stymied by the Senate, in which the Democrats hold a majority. Gridlock.
“In this year’s long-term budget outlook, Congress’ nonpartisan budget analysts project that spending on major federal health-care programs would nearly double over the next 25 years under current policies, from 5.4 percent of gross domestic product to 10.4 percent,” according to the Washington Post.
Along with a death spiral of ever-higher interest payments, continued growth in spending would push the federal debt to nearly 200 percent by 2037.
Baby boomers are about to flood Social Security and Medicare as they begin to retire. However, if health care costs inflate, “an expense that has outpaced the economic growth by an average of 1.6 percentage points every year since the mid-1980s,” will require massive tax increases or health care will have to be curtailed drastically.
Millions of baby boomers will not tolerate more gridlock as the hair on their heads turns white. There has to be a solution and it must be bipartisan. Costs of these entitlements will have to be reduced.
Raising taxes during an economic recession makes about as much sense as starting a fire in the middle of a tinder dry forest in an effort to stay warm.
If the Super Committee failure allows the automatic cuts in government across the boards, everything, including the Pentagon, Social Security, Medicare, Welfare, foreign aid, aid to education — literally everything will be cut, causing widespread pain among U.S. citizens. That’s going to be painful. However, not addressing the problem and continued debt growth will eventually bankrupt this nation.
What happens when we are borrowing 100 percent of GDP? Collapse. A great depression. Chaos.