Monday, June 18, 2012
Runaway Train? CBO Sounds Alarm on National Debt
Story taken from
A recent poll found that a shocking 51 percent of Americans believe the U.S. government will go bankrupt, and a new congressional report appears to corroborate those fears.
The question in the minds of many is whether our leaders will make the tough choices necessary to avoid a financial disaster.
Any way you slice it, Washington's spending is bigger than what America's economic pie can provide.
The last year the federal government produced a balanced budget was in 2000. In fact, Washington has had a more than $1 trillion deficit for the past four years. And the latest projections for the future of the national debt are bleak at best.
Currently, the national debt is nearly $16 trillion and growing.
The non-partisan Congressional Budget Office warned that if current spending policies remain the same, spending on Medicare, Medicaid, Social Security, and interest on America's loans will swallow up 100 percent of tax revenues by 2025.
In other words, every dollar collected will go toward the debt with nothing left for defense, roads, bridges, and other government programs.
The CBO also predicted that in 25 years the national debt will balloon to twice the size of the economy.
"What's causing this growing debt? Government spending on a breakneck pace," Rep. Paul Ryan, R-Wis., said.
The last time the nation's financial outlook was this bad was 1945, when America was spending overtime to fund a massive military effort to defeat Hitler and his allies.
The head of the Congressional Budget Office said Congress must make major changes to entitlement programs or dramatically raise taxes.
"Even if spending on all other programs, including national defense and a wide variety of domestic programs, fell to a smaller share of GDP than we've seen since before the second world war, debt would still be on an unsustainable upward trajectory without substantial changes in taxes, large entitlement programs or both," the CBO's Douglas Elmendorf warned.
Democrats and Republicans agree action is needed -- the question is what to do?
Republicans want to make changes through spending cuts and reforming entitlement programs.
"It's our moral responsibility to work together to chart a sustainable fiscal path to revitalize economic growth and to expand opportunity now and for generations to come," Ryan said.
But Democrats don't want cuts without increasing taxes, such as those on America's top earners.
"[Lawmakers must] adopt a plan to reduce the deficit in a balanced way, by applying the kind of framework of spending cuts and revenues generated by eliminating certain tax breaks that have been recommended by bipartisan groups," Rep. Chris Van Hollen recently told the House Budget Committee.
"You and your colleagues and all of us as American citizens face hard choices," Elmendorf told lawmakers.
Meanwhile, the nation's debt woes continue to grow.