Congress Must Cut Spending As Deficit Continues to Rise
February 8, 2011
Federal Reserve Chairman Ben Bernanke warned that the nation's projected deficit and debt levels "cannot actually happen" because creditors would refuse, at some future point, to finance the government's spending, says the Daily Caller.
The national debt is currently about 60 percent of the economy, or gross domestic product (GDP), and it is projected to reach 90 percent of GDP by 2020 and 150 percent of GDP by 2030. The Fed chairman once again warned that if Congress does not act soon to cut spending or increase revenues, or some mix of the two, the U.S. economy will be forced by crisis to correct. The chief driver of the nation's unsustainable debt path, Bernanke noted, continues to be the double barrel impact of rising health care costs and exploding baby boomer retirements on entitlement programs such as Medicare, Medicaid and Social Security.
- But Bernanke's citation of $9.5 trillion in national debt didn't include the $4.6 trillion owed by the government to trust funds for things such as Social Security and Medicare, which have paid out cash to the Treasury in exchange for promissory notes.
- The full national debt -- when both forms of debt are included -- is already just under 100 percent of GDP, which is currently around $14.6 trillion.
Source: Jon Ward, "Bernanke Headlines a Day of Grim Warnings about the Nation's Fiscal Standing," Daily Caller, February 4, 2010.
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