Presidential commission to address rising national debt -- The public debt will hit 90 percent of the economy by 2020.
From The Washington Post:
A presidential commission will convene Tuesday at the White House to address what leaders of both parties agree is one of the greatest threats to the country's economic future: the rising national debt.
Official forecasts suggest that without sharp changes in federal spending or tax collections, the United States could enter into a downward spiral of indebtedness that by the end of this decade would erode the country's ability to educate its children, care for the elderly or mount a robust national defense.
At the very least, the Commission on Fiscal Responsibility and Reform will mark the beginning of a national conversation about the role of government in American society. Social Security, Medicare and Medicaid -- popular programs that guarantee income support and universal health coverage to people older than 65 -- are growing faster than tax revenue as medical costs rise and the population ages. In the coming decades, the three programs are forecast to dwarf all other spending and force the Treasury to borrow to keep them afloat.
That crisis seemed distant until the recession hit, causing tax collections to tank and federal spending to increase as policymakers scrambled to avert an economic collapse. The public debt is forecast to rise from less than 40 percent of the economy to more than 60 percent by the end of this year, its highest level since 1952. The debt will hit 90 percent by 2020 under President Obama's budget, according to the nonpartisan Congressional Budget Office, a level last seen in the aftermath of World War II.
Meanwhile, the CBO forecasts that interest payments will rise from less than $200 billion a year to more than $900 billion. At that level, debt service would eat up nearly 20 percent of all federal spending, according to the CBO, and more than 4.5 percent of the economy -- the highest level since the government began tracking net interest payments in 1962.
"We're facing a situation that is far worse than we've ever seen in the past," said Charles Konigsberg, director of a separate debt-reduction task force at the Bipartisan Policy Center. "The last time the debt was this high was at the end of World War II. But then we owed the debt to ourselves. Now those interest payments are flowing out of the country" to China and other foreign investors.
"Greece is sinking on debt and deficit. Spain's next, Portugal's next. How'd you like to be the United States of America when China pulls the tin cup and says, 'We don't want T-bills, we want money'?" commission co-chairman Alan K. Simpson, a former GOP senator from Wyoming, said on "Fox News Sunday." "Now, that's where we are. This is serious business."
A presidential commission will convene Tuesday at the White House to address what leaders of both parties agree is one of the greatest threats to the country's economic future: the rising national debt.
Official forecasts suggest that without sharp changes in federal spending or tax collections, the United States could enter into a downward spiral of indebtedness that by the end of this decade would erode the country's ability to educate its children, care for the elderly or mount a robust national defense.
At the very least, the Commission on Fiscal Responsibility and Reform will mark the beginning of a national conversation about the role of government in American society. Social Security, Medicare and Medicaid -- popular programs that guarantee income support and universal health coverage to people older than 65 -- are growing faster than tax revenue as medical costs rise and the population ages. In the coming decades, the three programs are forecast to dwarf all other spending and force the Treasury to borrow to keep them afloat.
That crisis seemed distant until the recession hit, causing tax collections to tank and federal spending to increase as policymakers scrambled to avert an economic collapse. The public debt is forecast to rise from less than 40 percent of the economy to more than 60 percent by the end of this year, its highest level since 1952. The debt will hit 90 percent by 2020 under President Obama's budget, according to the nonpartisan Congressional Budget Office, a level last seen in the aftermath of World War II.
Meanwhile, the CBO forecasts that interest payments will rise from less than $200 billion a year to more than $900 billion. At that level, debt service would eat up nearly 20 percent of all federal spending, according to the CBO, and more than 4.5 percent of the economy -- the highest level since the government began tracking net interest payments in 1962.
"We're facing a situation that is far worse than we've ever seen in the past," said Charles Konigsberg, director of a separate debt-reduction task force at the Bipartisan Policy Center. "The last time the debt was this high was at the end of World War II. But then we owed the debt to ourselves. Now those interest payments are flowing out of the country" to China and other foreign investors.
"Greece is sinking on debt and deficit. Spain's next, Portugal's next. How'd you like to be the United States of America when China pulls the tin cup and says, 'We don't want T-bills, we want money'?" commission co-chairman Alan K. Simpson, a former GOP senator from Wyoming, said on "Fox News Sunday." "Now, that's where we are. This is serious business."
posted by Sid Cottingham | 6:10 AM
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