$16 Trillion Debt…
September 4, 2012 at 5:10 pm in News by Tea Party Patriots 4 Comments
According to USDebtClock.org, America’s debt has just reached $16 trillion. This means the nation has added $1 trillion to the national debt in less than 10 months, a rate that is expected to slow only gradually over the next twelve months.
Despite what Democrats say, this level of debt has a significant impact on the national economy. As Kenneth Rogoff explained in June (emphasis added):
In a series of academic papers with Carmen Reinhart – including, most recently, joint work with Vincent Reinhart (“Debt Overhangs: Past and Present”) – we find that very high debt levels of 90% of GDP are a long-term secular drag on economic growth that often lasts for two decades or more. The cumulative costs can be stunning. The average high-debt episodes since 1800 last 23 years and are associated with a growth rate more than one percentage point below the rate typical for periods of lower debt levels. That is, after a quarter-century of high debt, income can be 25% lower than it would have been at normal growth rates.
Of course, there is two-way feedback between debt and growth, but normal recessions last only a year and cannot explain a two-decade period of malaise. The drag on growth is more likely to come from the eventual need for the government to raise taxes, as well as from lower investment spending. So, yes, government spending provides a short-term boost, but there is a trade-off with long-run secular decline.
While this explosion of debt cannot be solely traced to President Obama – President Bush presided over nearly $5 trillion in debt, and was obviously responsible for the 2008 stimulus, TARP, and the auto bailouts, as well as much of the 2009 deficit – blame should not be shifted from his shoulders. The 2009 stimulus, the takeover of the auto industry, green energy “investments,” and the health care law have all helped bring the debt up by another $5.3 trillion. This has been done in less than half as much time as it took Bush to add nearly-equivalent levels of debt.
What policies would help prevent the coming fiscal collapse from becoming reality? First and foremost, spending must go down in all areas of the federal government. Second, people must be able to find work, which would help reduce deficits through an expanded tax base as the economy grows. Rather than stunt the economy through regulations, President Obama should be supporting a true “all of the above” energy policy, for example.
Democrats also often claim our current levels of debt are not problematic because we had similar levels in World War II. As they accurately point out, our level of debt as compared to the nation’s Gross Domestic Product dropped significantly between 1945 and 1976. However, their argument ignores three aspects of the post-World War II American economy that don’t exist today, as this Reason Foundation blog post points out. These include the complete lack of an entitlements crisis two generations ago that is facing today’s young people.
In short, this week’s mile-marker of $16 trillion does not happen in a vacuum. The economic impact of the debt is already being seen, and unless Congress and the White House (both this year and next) are willing to do what is necessary to balance the budget and get people back to work, these impacts are likely to only worsen.
I truly believe that cuts to our Natioal Defence should NOT be considered, ever! We are at such a low level of “Boots on the Ground” we are in serious jeopardy to defend ourselves, even from a 3rd world nation! We leave ourselves open for something even worse then 9/11 & that is truly Sad!!!
And what happens to interest payments on this skyrocketing debt if interest rates go up to anywhere near normal market rates? Wow!
So I guess the Federal Reserve will have to artificially keep interest rates near zero, forever. Which kills saving, and investing in bonds. People have already quit saving. If they quit buying government bonds too?
I hate this expression, but, it’s unsustainable.
STIMULUS CHECKS
Sometime this year, we taxpayers will again receive another ‘Economic Stimulus ‘ payment.
This is indeed a very exciting program, and I’ll explain it by using a Q & A format:
Q. What is an ‘Economic Stimulus’ payment ?
A. It is money that the federal government will send to taxpayers.
Q.. Where will the government get this money?
A. From taxpayers.
Q. So the government is giving me back my own money ?
A. Only a smidgen of it.
Q. What is the purpose of this payment ?
A. The plan is for you to use the money to purchase a high-definition TV set, thus stimulating the economy.
Q. But isn’t that stimulating the economy of China?
A. Shut up.
Below is some helpful advice on how to best help the U.S. Economy by spending your stimulus check wisely:
* If you spend the stimulus money at Wal-Mart, the money will go to China or Sri Lanka.
* If you spend it on gasoline, your money will go to the Arabs.
* If you purchase a computer, it will go to India, Taiwan or China.
* If you purchase fruit and vegetables, it will go to Mexico, Honduras and Guatemala or Chile.
* If you buy an efficient car, it will go to Japan or Korea.
* If you purchase useless stuff, it will go to Taiwan.
* If you pay your credit cards off, or buy stock, it will go to management bonuses and they will hide it offshore (a lot of it off shore).
Instead, keep the money in America by:
1) Spending it at yard sales, or
2) Going to ball games, or Bars and Lounges. or
3) Spending it on prostitutes, or sugar daddys and one night stands, or
4) Beer or Margaritas.
5) Tattoos and trampstamps.
(These are the only American businesses still operating in the U.S.)
Conclusion:
Go to a ball game with a tattooed prostitute or sugar daddy that you met at a yard sale and drink beer and dance all night!
No need to thank me, I ‘m just glad I could be of help.
2 unfunded wars cost us $4 Trillion (according to Ron Paul), unfunded TARP cost $700 Billion, unfunded Bush stimulus cost $200B, unfunded Bush tax cuts cost $4T (according to the Congressional Budget Office) and unfunded Medicare part D cost $1T (also according to CBO). Except for the Iraq war, all those debt inducing policies are still in place today under Obama. Plus, we’re still spending Billions each year on Iraq war veteran benefits, retirement, disability, unemployment, VA costs etc. So where do you come up with Bush’s responsibility as only being $5.3 Trillion? It adds up to $9.9 Trillion and exponentially rising each day those policies remain in place (in addition to Billions added each day due to the recession and cost of debt servicing). The cost of those policies still in place do not simply disappear just because a new president takes over. Let’s be honest. With the exception of Obama’s own stimulus ($787 Billion), all the added debt since January 2009 is attributed to Bush policies put in place long before Obama took office.