Debt is the essential fuel for a superpower that every day spends billions of dollars more than it receives in tax revenue.
From The Washington Post:
Debt is the essential fuel for a superpower that every day spends billions of dollars more than it receives in tax revenue.
The United States owes investors nearly $8 trillion. That number could more than double in a decade. The projected growth of the federal debt is widely viewed as unsustainable. It's unlikely that the nation will ever default, but neither is that any longer unthinkable.
President Obama is expected to address the burgeoning debt in a major economic speech Tuesday in Washington. He inherited a huge deficit, and there's nothing but red ink as far as the eye can see. The administration has estimated that there will be $1 trillion-plus shortfalls through 2011, followed by $700-billion-plus shortfalls through 2019.
Whopper budget deficits for so many years will mean that the cumulative debt will creep up as a percentage of the nation's gross domestic product. How much debt the country can handle is debatable. The problem is that, if investors think the United States isn't fiscally responsible, they could start demanding much higher interest rates when they bid on Treasury securities. The feedback loop could get ugly. The nation could have to borrow hundreds of billions just to pay interest on what it owes. This has been touted as a classic path to irreversible national decline.
Fiscal calamities in the past have been solved or moderated. But often the politicians who tried to fix the problem were booted from office. When President George H.W. Bush broke his no-new-taxes pledge in 1990, he torpedoed his reelection chance. Bill Clinton raised taxes in 1993, and the Democrats quickly lost control of Congress. Clinton left office with the nation showing a budget surplus, but that vanished with the George W. Bush tax cuts, two wars and a new entitlement program, the Medicare prescription drug benefit, that Congress and the White House decided didn't need to be paid for.
Fiscal discipline means pain in a political culture that has shown itself to be pain-averse.
"It's kind of an ouchless society. In other words, nothing's supposed to hurt," says Robert Bixby of the Concord Coalition, a deficit watchdog group. "We can have new spending programs, but nobody's supposed to pay for them. We can have a war, but nobody pays for it. Tax cuts pay for themselves. You're not supposed to ask for any sacrifice."
Debt is the essential fuel for a superpower that every day spends billions of dollars more than it receives in tax revenue.
The United States owes investors nearly $8 trillion. That number could more than double in a decade. The projected growth of the federal debt is widely viewed as unsustainable. It's unlikely that the nation will ever default, but neither is that any longer unthinkable.
President Obama is expected to address the burgeoning debt in a major economic speech Tuesday in Washington. He inherited a huge deficit, and there's nothing but red ink as far as the eye can see. The administration has estimated that there will be $1 trillion-plus shortfalls through 2011, followed by $700-billion-plus shortfalls through 2019.
Whopper budget deficits for so many years will mean that the cumulative debt will creep up as a percentage of the nation's gross domestic product. How much debt the country can handle is debatable. The problem is that, if investors think the United States isn't fiscally responsible, they could start demanding much higher interest rates when they bid on Treasury securities. The feedback loop could get ugly. The nation could have to borrow hundreds of billions just to pay interest on what it owes. This has been touted as a classic path to irreversible national decline.
Fiscal calamities in the past have been solved or moderated. But often the politicians who tried to fix the problem were booted from office. When President George H.W. Bush broke his no-new-taxes pledge in 1990, he torpedoed his reelection chance. Bill Clinton raised taxes in 1993, and the Democrats quickly lost control of Congress. Clinton left office with the nation showing a budget surplus, but that vanished with the George W. Bush tax cuts, two wars and a new entitlement program, the Medicare prescription drug benefit, that Congress and the White House decided didn't need to be paid for.
Fiscal discipline means pain in a political culture that has shown itself to be pain-averse.
"It's kind of an ouchless society. In other words, nothing's supposed to hurt," says Robert Bixby of the Concord Coalition, a deficit watchdog group. "We can have new spending programs, but nobody's supposed to pay for them. We can have a war, but nobody pays for it. Tax cuts pay for themselves. You're not supposed to ask for any sacrifice."
posted by Sid Cottingham | 6:57 AM
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