GAO: Change Fiscal Course Or Else!!
By Number Six
Sunday, October 29, 2006 at 03:02 PMThe head of the GAO, David Walker, talks like it's not bad ahead, it's horrific:
Their basic message is this: If the United States government conducts business as usual over the next few decades, a national debt that is already $8.5 trillion could reach $46 trillion or more, adjusted for inflation. That's almost as much as the total net worth of every person in America - Bill Gates, Warren Buffett and those Google guys included.
A hole that big could paralyze the U.S. economy; according to some projections, just the interest payments on a debt that big would be as much as all the taxes the government collects today.
And every year that nothing is done about it, Walker says, the problem grows by $2 trillion to $3 trillion.
That's scary, folks, we're talking Stephen King-grade scary. Okay, maybe John-The-Divine scary while we're at it.
People who remember Ross Perot's rants in the 1992 presidential election may think of the federal debt as a problem of the past. But it never really went away after Perot made it an issue, it only took a breather. The federal government actually produced a surplus for a few years during the 1990s, thanks to a booming economy and fiscal restraint imposed by laws that were passed early in the decade. And though the federal debt has grown in dollar terms since 2001, it hasn't grown dramatically relative to the size of the economy.
All of which means? We had a showing of fiscal responsibility during the Clinton era, which promptly went to poop the instant Das Chimpenfuerher was installed. From surplus and making some headway on the national debt to looking like a third-world nation...financially..in under six short years.
Why is America so fiscally unprepared for the next century? Like many of its citizens, the United States has spent the last few years racking up debt instead of saving for the future. Foreign lenders - primarily the central banks of China, Japan and other big U.S. trading partners - have been eager to lend the government money at low interest rates, making the current $8.5-trillion deficit about as painful as a big balance on a zero-percent credit card.
In her part of the fiscal wake-up tour presentation, Rogers tries to explain why that's a bad thing. For one thing, even when rates are low a bigger deficit means a greater portion of each tax dollar goes to interest payments rather than useful programs. And because foreigners now hold so much of the federal government's debt, those interest payments increasingly go overseas rather than to U.S. investors.
More serious is the possibility that foreign lenders might lose their enthusiasm for lending money to the United States. Because treasury bills are sold at auction, that would mean paying higher interest rates in the future. And it wouldn't just be the government's problem. All interest rates would rise, making mortgages, car payments and student loans costlier, too.
All of which means? Rethugs, their phoney war, their poor spending habits have to go and immediately, then, sound fiscal thinking must come into play, or else, we are genuinely looking at The 2nd Great Depression, but this time, with an added bonus: Uncle Sam in Chapter 11.