Administrations of both parties have been reckless spenders for over two decades and have built up an absurd amount of federal debt, which grows bigger every year due to ongoing deficit spending. Pretending that this has no negative consequences is the national sport. Unfortunately, reality always intrudes and there will be a fierce reckoning. The Congressional Budget Office is one of the few honest and semi-trustworthy institutions left in our nation’s cesspool of a capital. A report released this week should be broadcast far and wide and strike fear into every American’s core. It demonstrates in no uncertain terms how dire our current and future fiscal quandry is. (CBO Report)
The deficit is currently over 5% of all economic activity in this country and is projected to stay over that level and rise to 10% in a few decades. Those deficits mean additional permanent debt, which will not be financed at low interest rates, but at rates closer to those we are currently experiencing, meaning that interest payments are a primary contributor to the ongoing annual deficits. As the CBO notes the combination of deficits and debt will slow economic growth, exacerbating the revenue problem, and increases payments to foreign nations and companies that hold much of our debt. It is a transfer of our wealth to other nations.
As it has done for these last two decades, you can anticipate that Congress will ignore the warnings and the advice of the CBO and will continue its feckless spending. And then disaster will strike–there simply won’t be an ability to continue to issue debt at any reasonable level, spending relied upon by tens of millions of people will have to be ended or limited, the economy will be weighed down by excessive taxes. The message is clear, Congress has to cut spending, period, and has to facilitate economic growth. We need to get to no deficits now, and we need to start to reducing the debt pile.