A recent report by the Government Accounting Office (GAO) describes America's long term fiscal outlook:
Weaknesses in the economy and financial markets—and the government’s response to them—have contributed to near-term increases in federal deficits, which reached a record level in fiscal year 2009. While a lot of attention has been given to the recent fiscal deterioration, the federal government faces even larger fiscal challenges that will persist long after the return of financial stability and economic growth...GAO’s simulations continue to show escalating levels of debt that illustrate that the long-term fiscal outlook remains unsustainable
The GAO tells us why our fiscal outlook is unsustainable:
roughly 92 cents of every dollar of federal revenue will be spent on the major entitlement programs and net interest costs on the debt by 2019. This is due largely to a substantial increase in interest on federal debt...by 2030 there will be little room for “all other spending,” which consists of what many think of as “government,” including national defense, homeland security, investment in highways and mass transit and alternative energy sources, plus smaller entitlement programs such as Supplemental Security Income, Temporary Assistance for Needy Families, and farm price supports.
The GAO estimates assume that federal revenue will be 20.2% of GDP, which is already higher than historical levels of taxation.
Currently, our federal debt is over $12 trillion. Here are the debt projections for the next 10 years.
2010 - $14 trillion.
2011 - $15.2 trillion
2012 - $16.2 trillion
2013 - $17.1 trillion
2014 - $18 trillion
2015 - $19 trillion
2016 - $20 trillion
2017 - $21 trillion
2018 - $22 trillion
2019 - $23 trillion
As you can see, our debt is rising at roughly $1 trillion each year.
These numbers do not include the health care reform that is making it's way through Congress, which will be a major increase in the entitlement programs that are already unsustainable. The recently released Senate health care bill is estimated to cost $849 billion over 10 years, but those numbers are bogus. They are hugely underestimated, because Congress uses sleight of hand to arrive at those numbers. The full benefits of the health care bill don't start until 2014, but the taxes (about 14 different taxes in all) start in 2010, skewing the true costs if the bill. If you start calculating the cost of the Senate health care bill from when the benefits start, that makes the cost more like $1.5-2 trillion. Even the $849 billion rigged figure depends on massive Medicare cuts that Congress will probably never have the guts to make (they never have before), along with the fact that the doc-fix of $247 billion was separated out to make the Senate bill look cheaper. As always, our dishonest Congress is being dishonest about the true costs of health care reform. This reform will almost certainly add even more to the deficit and debt, unless even more taxes are raised to pay for it.
There are two ways to deal with our unsustainable fiscal problem. True conservatives (not pretenders like Bush) would say reduce government spending, which has spun completely out of control over the last decade. This is known as the smart way out. Liberals would say increase taxes to levels unprecedented in American history. It would probably take a 40-50% increase in tax levels to pay for all our committments and begin paying down our unsustainable, dollar-killing debt. Such tax increases would also have a business-killing, dampening effect on our economy at a time when unemployment is already skyrocketing and we're trying to climb out of a recession. This is known as the stupid way out.
It's up to you America. They called my father's era The Greatest Generation. From what I'm seeing so far, I'm calling my own era The Greediest Generation. We are bankrupting our children's futures for our own momentary comfort. We can't even face the unsustainable reality that WE CREATED. We just pretend it doesn't exist, while our crooked politicians drive us deeper into the hole and tell us how much they are helping us at the same time. Shame on them, and shame on us for letting them get away with it. Shame on us even more for voting for the biggest liars, the ones who promise us the most goodies as they abandon all sense of financial responsibility and sell us down the river.
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