Writing Checks against the Future

January 26, 2012

Despite its prevalence in the national dialogue, controlling the burgeoning government debt does not appear to be a priority of the federal government.  Approval of the Budget Control Act last August did little to control deficit spending and the government continues on an increasingly perilous course from which it will be difficult to recover, says Emily Skarbek, a research fellow at the Independent Institute.

  • On January 9, the federal government's debt officially surpassed $15 trillion -- an amount larger than the total annual output of the U.S. economy.
  • At present, the Obama administration projects total debt to increase by $26 trillion in 10 years, which is more than 15 percent higher than the projected $22.5 trillion gross domestic product.
  • Public debt has increased by at least $500 billion per year every year since 2003.
  • More than 30 percent of the current total (some $4.6 trillion) has been accumulated in just the past four years.

Dismissing these concerns, some argue that the debt only continues to grow because of low interest rates and that all is well because we owe this money to ourselves.

However, this misleads a national audience to the point that they do not recognize the unprecedented nature of the current situation.  Public debts of this magnitude have historically been reserved for massive capital investments or emergencies.  However, the current debt is ballooning solely because of current consumption, as tax dollars leak into the hands of a variety of interest groups.  Large corporations, the big banks and financial institutions, federal entitlement recipients, health care providers, defense manufacturers and government workers each leech away public monies to the point that President Obama's call for a $1.2 trillion increase in the debt ceiling has become a formality.

Source: Emily Skarbek, "Writing Checks against the Future," Washington Examiner, January 22, 2012.

 

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