While You Were Sleeping -- National Debt On Track To Hit 141% Of GDP As Outlook Worsens -- CBO

[SirLinksALot]

SOURCE: INVESTORS BUSINESS DAILY

URL: http://www.investors.com/politics/commentary/the-nations-debt-crisis-just-got-a-whole-lot-worse/

by: John Merline


The nation's long-term fiscal picture has grown considerably more dire over the past year, according to the latest forecast from the nonpartisan Congressional Budget Office, driven mainly by out-of-control spending.

The CBO now expects federal debt held by the public to reach 141% of the nation's GDP by 2046, assuming that current policies remain in place. That's up sharply from last year's forecast of 111%, and would be the highest level of debt in the nation's history.

The new forecast shows that annual deficits will top 8% of GDP by 2046, up from 2.9% this year. The growing deficit is entirely the result of increased spending. While revenues are expected to hit 19.4% of GDP that year -- up from this year and far higher than the post-World War II average -- federal spending will consume a record 28.2% of the economy by 2046.

And despite President Obama's promise that health care reform would help solve the nation's deficit problems, health care will continue to be a major driver of federal spending, the CBO says, climbing "much faster than the economy."

 As a result, federal spending on health care -- Medicare, Medicaid, ObamaCare, etc. -- will rise from 5.5% of GDP this year to 8.8% by 2046. In fact, by 2034, the federal government will spend more on health care than it does on defense, domestic discretionary programs and welfare programs combined. By 2046, nearly half of all federal revenues will go to pay health care bills.

CBO also expects interest payments to shoot up from 1.4% of GDP to 5.8% of GDP.






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[bolobaby]

The kids of 'Murica thank you:

"Thank you Barack Obama, bawk bawk!"

[SirLinksALot]

Actually, part of the blame goes to CONGRESS ( Yes, the Republican one ).

They've been in control of the purse strings since 2012 and done next to nothing about it.

[bilo]

Actually, part of the blame goes to CONGRESS ( Yes, the Republican one ).

They've been in control of the purse strings since 2012 and done next to nothing about it.

You're right. They were to afraid to confront our first black POTUS.

I don't pay much attention though to any economic estimates beyond 3-4 years because there are so many variables. It is obvious though that the debt problem will not be fixed, too many people like their entitlements at someone else's expense. At some point we will feel the effect of this failure in the collapse of the dollar's value, probably after the dollar is replaced as the world's reserve currency.

[Free Vulcan]

Interest charges right now are $400B on what I'm estimating an average 2% interest rate and 6y average maturity.

If rates go to a mere 6% and stay there, that's $1.2T a year, a little under a third of our current budget. That doesn't account for the fact that we are still running deficits, and if we have another recession - large ones, assuming anyone will float them - which means that figure climbs regardless.

If something isn't done, and it won't be, then at some point interest payments are going to start cutting into other parts of the budget. When it starts cutting into social programs, that's when it hits the fan.

DC is running out of money, and no matter what kind of denial or word games anyone wants to play, we are on a collision course for a complete financial breakdown.

[bolobaby]

Actually, part of the blame goes to CONGRESS ( Yes, the Republican one ).

They've been in control of the purse strings since 2012 and done next to nothing about it.

Oh, no doubt. They should have let Barack continue with his inane government shut down and insisted on cuts... and not just to the military, as has been happening.

Congress has the power of the purse - they just don't seem to realize it.

But they fold to Obama. Constantly. Because they fear "blame" and "optics."

Screw 'em.