A "LOST DECADE" FOR U.S. GROWTH?
December 2, 2009
To say that the deficits of the current White House are extraordinary and unprecedented is almost to underplay the reality. From 2009 through 2012, we will add as much to the nation's debts as we did in the first 234 years of America's existence, says Investor's Business Daily (IBD).
In fact, the coming wave of deficit spending is alarming:
- Over the next 10 years the United States will rack up $13 trillion in debt -- an amount nearly equal to our entire current economic output.
- This year alone, the deficit will be an astounding 11.2 percent of gross domestic product (GDP), or $1.4 trillion.
- Over the next 10 years, the deficit will average 5 percent of GDP; that compares with an average of 2.4 percent from 1970 to 2008.
Why is this happening? A slow economy, of course, hurts revenues. But the true culprit is spending, says IBD:
- In the postwar era, we spent an average of about 20 percent of GDP on the federal government.
- Over the next decade, it will average 23.5 percent -- a real gain of 18 percent a year.
Soaring costs for Social Security and Medicare, the $787 billion "stimulus," $700 billion in bailouts and increased outlays virtually across the board have pushed spending out of control, says IBD.
If nothing's done, the spending and deficits will have ruinous effects on our economy and standard of living by forcing taxes up. As a recent report from the nonpartisan Tax Foundation notes, just to close this year's expected deficit would require a tripling of tax rates for all taxpayers:
- Today, joint filers face tax rates that range from 10 percent to 35 percent of their income.
- To eliminate the deficit, the tax rates would have to soar to a range of 27.2 percent to 95.2 percent.
"There can be little doubt that the high tax rates necessary to balance the budget in the next several years would discourage all income-producing endeavors," says Tax Foundation Policy Director Bill Ahern, author of the report.
Source: Editorial, "A 'Lost Decade' For U.S. Growth?" Investor's Business Daily, December 2, 2009.
For Tax Foundation report:
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