Also Erupting: US National Debt

The Federal Government cut US$40 billion from their budget, the equivalent of 2 days interest on public debt. All so the debt ceiling an be raised so that Americans can continue to borrow more money. Borrowing to spend more is costing Americans more than they can keep up with. The $14 trillion debt is not going away anytime soon – or diminishing.

Will the US face another financial crisis caused by national debt?

The Federal Government cut US$40 billion from their budget, the equivalent of 2 days interest on public debt. All so the debt ceiling an be raised so that Americans can continue to borrow more money. Borrowing to spend more is costing Americans more than they can keep up with. The $14 trillion debt is not going away anytime soon – or diminishing.

Will the US face another financial crisis caused by national debt?

Dr John Rutledge writes:

These numbers were prepared by the Congressional Budget Office (CBO) which is referred to as nonpartisan but never is. It’s Director and its composition are controlled whichever party holds the majority in Congress, in this case the Democrats. Historically, the CBO tends to underpredict spending, underpredict change, and underpredict the impact of taxpayer response to changes in tax rates. In other words, these projections are probably too low.

As the chart shows, World War I, the Great Depression, and even World War II, when the national debt briefly exceeded GDP, were just blips on the chart. The programs already on the books (so-called entitlements, including social security, Medicare, Medicaid), the recent money squandered on the bailout, and the massive increase in spending in the first Obama budget will increase the federal debt to about 4x the levels we have lived with in recent years.

[quote]The CBO’s conclusion is chilling:

Under current law, the federal budget is on an unsustainable path—meaning that federal debt will continue to grow much faster than the economy over  the long run…

CBO’s long-term budget projections raise fundamental  questions about economic sustainability…

It’s implication for tax rates is worse:

If spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the United States.[/quote]

According to recent Gallup poll, 73 percent of Americans believe wasteful government spending is to blame. The Federal government on the other hand, say almost half of Americans simply: spend more than they can afford.

Related: A Dozen Alarming Cosumer Debt Statistics

Here’s what they don’t tell you about the US National Debt: