Tuesday, June 5, 2012

The Consequences of Our Debt


The US will be able to borrow cheaply until it can't. That day may come without warning. We can ignore that risk believing now is not the time to grapple with this issue, but it is a risk.  

There's another issue.  Savings equals investment. When you save a dollar, it goes into the bank, or into the market. Investment equals growth. Investment drives productivity. Productivity drives wage growth. These aren't Chicago School versus Keynesian concepts. This is 2+2=4 kind of stuff. 

We borrow to subsidize the wealthy and middle class with things like Medicare, Social Security, farm subsidies and the Ex-Im Bank. Our children are left with the debt. It's lucky for us old well-off people the young aren't aware of the massive inter-generational Ponzi scheme we are playing with them. If they knew they would riot. 


News from The Hill: CBO projects US debt will be double GDP by 2037
CBO projects US debt will be double GDP by 2037
By Erik Wasson

U.S. debt will be nearly twice the size of the U.S. economy by 2037, the non-partisan Congressional Budget Office warned Tuesday.

The new CBO report warns that increased entitlement spending driven by the retirement of the baby boomers and insufficient revenue is making the long-term outlook for the national debt increasingly dire.

Under CBO's most likely scenario, in which lawmakers extend current tax rates and fail to curb entitlement spending, debt held by the public would reach 109 percent of the economy by 2026, and it would be almost 200 percent of GDP by 2037. 

Link: http://thehill.com/blogs/on-the-money/budget/230901-cbo-warns-of-grim-long-term-debt-outlook

No comments:

Post a Comment