DEATH BY DEFICIT
June 8, 2009
America's fiscal profligacy has been growing for years at an ever-accelerating rate, and since last fall's financial/economic crisis, the rate has become supercharged. We think we can't survive without deficit spending -- but we soon won't be able to survive with deficit spending, either, says Tony Blankley, former press secretary to Newt Gingrich.
- In 2012, federal debt will be more than $15 trillion.
- Annual interest will be between $1 and $1.7 trillion.
- Deficits will average about $1 trillion a year -- $22 trillion by 2019.
However, this assumes the world will continue to buy our Treasury notes at plausible rates. The bond market may well rebel ultimately against our government's excessive borrowing and spending, says Blankley:
- The "good news" of only $22 trillion in debt supported by purchasable bonds also assumes that our economy will recover this year and that we then will have continued steady economic growth.
- The not-so-good news is that we will have to borrow more than the current budgets propose; starting in 2017, the Medicare trust fund will be depleted, and 20 years later, Social Security's depletion will begin.
- And the current budget projects that defense spending will decrease as a percentage of the federal budget, and as baby boomers retire, we will move from having four workers for each retiree to two.
- That means a weaker economy, as this smaller work force will not produce enough to support all of government's costs.
Surely, for the next decade, the United States will bungle onward with both our form of government and our deficit spending. But sometime soon after 2017, when Medicare's trust fund will begin to be depleted, the shocking reality of being forced to do without borrowing will shape -- and probably misshape -- both our way of life and our form of governance, says Blankley.
Source: Tony Blankley, "Death by Deficit," Townhall.com, June 3, 2009.
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