The CBO’s new long-term budget analysis is forecasting that the federal public debt, now about 73% of GDP, is on track to reach 100% of GDP by 2038, an unsustainable long-term trajectory.
Federal spending for ObamaCare, Medicare, Medicaid and Social Security would increase to a total of 14% of GDP, twice the 7% average of the past 40 years. In contrast, total spending on everything other than the major health care programs and Social Security, and net interest payments would decline to 7% of GDP, well below the 11% average of the past 40 years to a smaller share of the economy than at any time since the late 1930s.
The government’s net interest payments on debt would grow to 5% of GDP, compared with an average of 2% over the last 40 years.
Over the next 25 years, Americans will be taxed more to pay for a federal government that will essentially have become a redistribution, wealth-transfer mechanism – taxing and spending at record highs.
The CBO notes that these figures do not even factor in the “harm” that the growing debt will cause to the economy, how the debt will “crowd out” investment in factories and computers or how people might respond to changes in the after-tax wages. When you factor in all this, the debt will be much closer to 200% of the GDP.
According to the CBO “assumptions leading to the most negative impact of GNP, debt would reach 250% of GDP shortly after 2038,” and “their model cannot provide reliable estimates of the economic impact of debt exceeding that magnitude. . . .If interest rates and the debt-to-GDP ratio rose to levels well outside of that experience, the estimated responses would probably no longer be valid.” In other words, their model would be useless or so would the economy.
During the four years that marked President Barack Obama’s first term in office, the real median income of American households dropped by $2,627 and the number of people in poverty increased by approximately 6,667,000, according to data released today by the Census Bureau. The record total of approximately 46,496,000 people in the United States who are now in poverty is more than twice the population of Syria, which, according to the CIA, has 22,457,336 people.
Per the Department of Agriculture, a record 23,116,928 American households were enrolled in the federal government’s Supplemental Nutrition Assistance Program (SNAP)—AKA food stamps—during the month of June. That outnumbers the 20,618,000 households that the Census Bureau estimated were in the entire Northeastern United States as of the second quarter of 2013. By contrast, in fiscal 2009, the year President Obama was inaugurated, there was a monthly average of 15,161,469 American households on food stamps, according to the Department of Agriculture. The 23,116,928 households on food stamps in June of this year exceeded that 2009 monthly average by 7,955,459 households—or 52 percent.
Do you really believe that we can hang on until 2038? With Obama pushing for ever higher debt spending we will be lucky to make it through his 2nd term.
