The Congressional Budget Office (CBO) is warning us that our federal (public) debt is “historically high” (no news there) and that it’s “likely to remain historically high relative to the size of the economy for the next decade.”
As you already know, whenever we hit the debt ceiling — the legal limit on accumulated debt — Congress just bumps up the limit another notch or two, and we wait until we hit the new limit before doing it all over again. This has become our standard mode of operation in Washington.
What the CBO is telling us is that we are in serious trouble. You probably already knew that, too. We have tried to make that point repeatedly over the years by showing you just how big our debt really is and how difficult (read impossible) it will be to pay it down — now, later, or ever.
(Acknowledged federal debt is now $16.7 trillion. The hole is really a lot deeper with additional government commitments added to that figure.)
Here are the CBO’s details concerning further increases in our national debt:
Interest Rate Fears: Right now we have historically low interest rates. When these rates rise to more normal levels, government spending to meet those higher rates will increase dramatically.
Lower Wage Fears: Government borrowing for the above and other needs reduces national saving; wages will be lower with greater borrowing than they would be if we actually paid down some of our debt.
Less Flexibility: With increased debt and increased borrowing to meet it, lawmakers will have less flexibility to respond to unexpected financial challenges. [NORM ‘n’ AL Note: With our federal government, any challenge ends up being financial, because we have to shell out money to meet it.]
Greater Risk of Fiscal Crisis: Increased debt will certainly increase the risk of a fiscal crisis; at such a time, the public and our foreign investors will lose so much confidence in the government’s ability to manage that the government will no longer be able to borrow at reasonable rates.
Medicare Insolvent by 2024: Its present structure is not sustainable, and it is already running a large shortfall.
Social Security Insolvent by 2033: Beneficiaries will face substantial cuts in benefits after this date, if not before.
Revenues Up Slightly, But Spending Is Up More Than Slightly: No further comment needed.
No Balanced Budgets In Sight: ‘Nuff said here, too.
What About All Those Sequester Cuts? Those mandatory cuts that went into effect because Congress couldn’t get out of its own way, again, were blown totally out of proportion by both political parties. Those sequester cuts took exactly 2.4% out of US spending, or about three cents out of every dollar.
Any Other Big Problems On The Horizon We Should Be Worried About?
Oh, not really…unless you’re somebody who worries about inflation (our money becoming worth less and less because of factors like the government printing money as fast as the presses will run). And other countries who would normally invest in US debt (Treasury securities) then becoming unwilling to do so, since their investment is automatically worth less and less because it’s repaid with cheaper dollars.
How About The US Jobs Situation?
Yup, a few big worries there. We continue to need more skilled labor, but we are not able to train enough skilled labor in our colleges and universities. And the entire workforce cannot flip hamburgers or drive taxicabs. Plus it’s beginning to look like we may never see the full employment picture again that we are used to in this country, so we will continue to have to make do with high unemployment and expensive unemployment benefits.
How bad do you think things could possibly get, Norm ‘n’ Al?
We don’t have to guess. We KNOW how bad things could get. In fact, we know how bad they WILL get. How do we know that? Because we have read The Book. The Bible. We know precisely what things are going to look like in the relatively near future. You can know, too. Read the last book of the Bible, called Revelation. If you need some help in putting that book into a picture that’s easy to understand — and most of us do, because of the book’s symbolism and imagery — just get in touch with us so we can suggest some helpful sources of understanding.
[Some of the above content from Bankrupting America]
As always, posted for your edification and enlightenment by
NORM ‘n’ AL, Minneapolis