Nonprofit group: Here comes a train wreck
Published: March 9, 2010
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Of the $3.8 trillion in additional debt that’s created, $800 billion of it is related to higher interest payments alone. The government’s interest payments are just like yours on a credit card–it’s essentially taxpayer money out the window as punishment for previous overspending.
New Congressional Budget Office report shows oncoming fiscal train wreck
The nonpartisan Congressional Budget Office (CBO) released an initial analysis of the President’s proposed budget. The prognosis is grim.
If the President’s budget becomes law, the CBO reports that the national debt will grow $9.7 trillion over the next decade. That’s $3.8 trillion more in debt than would occur if Washington simply continued already-planned spending.
At the end of 2009, debt held by the public was 53 percent of GDP. The CBO expects it to reach 90 percent of GDP by 2020. As a result of all this increased debt, taxpayers will see a growing portion of their tax dollars used for interest payments, which would quadruple during that time period.
Of the $3.8 trillion in additional debt that’s created, $800 billion of it is related to higher interest payments alone. The government’s interest payments are just like yours on a credit card– you don’t get anything for that money; it’s essentially taxpayer money out the window as punishment for previous overspending.
Government spending is expected to remain at 24 percent of GDP in 2020, which is a very significant increase from the 20 percent that government has consumed during recent history.
In July, CBO Director Douglas W. Elmendorf testified before the Senate Budget Committee about the United State’s long-term challenges, saying the following:
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. Keeping deficits and debt from reaching levels that would cause substantial harm to the economy would require increasing revenues significantly as a percentage of gross domestic product (GDP), decreasing projected spending sharply, or some combination of the two.
It’s worth noting that the CBO’s numbers are slightly higher than those estimated by the White House in February. Yet regardless of whose assumptions you accept, the message is clear: We are on track for a fiscal train wreck.
The ideas and opinions expressed belong to Bankrupting America, an educational project that "explores the policies hindering economic opportunity and growth in America." Visit /www.bankruptingamerica.org The ideas and opinions expressed are not necessarily those of the Business Journal.
