Thursday, October 8, 2009

The Devastating National Debt

Our national debt is somewhere in the neighborhood of eleven trillion dollars. During the reign of George W. Bush, the debt almost tripled in size. According to a PBS Frontline piece (Ten Trillion and Counting), under Obama and the Democrats, the national debt will grow at a faster rate than it did under Bush. By the end of this year, it will be almost thirteen trillion dollars.

American voters keep electing politicians---both Democrats and Republicans--- who believe in institutionalized deficit spending. Dick Cheney's view (a direct quote) was: "Deficits don't matter." Medicare Part D (drug coverage), ramrodded through by the Bush Administration and criticized as being a gift to large drug companies, is an "entitlement" law that will cost sixty billion dollars this year alone. Remember the bank bailouts, and their architect, Bush's Treasury Secretary Henry Paulson? The price tag on those was close to a trillion dollars, if I recall correctly. [Paulson, by the way, was an elite Wall Street investment banker before he was Treasury Secretary.] Essentially, we now have the nine largest banks in this country nationalized by the Fed Government; that's how Frontline's piece, Inside the Meltdown, characterizes the situation. The largest insurance company in the world, AIG (American International Group), also was nationalized---the Feds own 80% of it. It is intimately connected to banking because AIG writes policies insuring that large investment banks in the U.S. and around the world will not go bankrupt.

Under Obama we have the so-called "Recovery Stimulus Plan". I believe the initial cost is about one trillion dollars. $787 billion already has been added to the national debt. According to the OMB, this year's annual budget deficit will be $1.7 trillion, the largest annual deficit in our history. All of this doesn't even consider the cost of any health care legislation.

By 2017, the total national debt (not the annual deficit) is projected to be $21 trillion. Shortly thereafter, it will reach $23 trillion, and then will be more than the economic output of the entire country. Our largest creditor, China, already has stated that it's concerned about the economic viability of the United States. Every day the Fed Government "sells" its debt---that's government-speak for borrowing money. What happens when no one any longer comes to the "sale"?

Government has over-promised relative to "benefits". Either taxes have to be substantially increased, or promised "benefits" have to be substantially reduced...or both.