What has happened since I wrote my last post back in November about our government’s spending and debt accumulation? Did our representatives all read this blog and recognize the disaster ahead? Did Congress cut spending and chart a course to fiscal sanity? Did the President call for all citizens to become less reliant on government? Well, not quite. Actually, and I’m sure some of you may not be surprised by this, the spending and debt situation has become worse. The recent elections showed that the voters have recognized the problem, but many of our esteemed representatives seem to be a little slower in grasping the situation.
The Congressional Budget Office just predicted that the federal budget defict for 2011 will be a record $1.5 trillion, almost 10% of Gross Domestic Product. That comes out to about $5,000 per person. The country is accumulating debt at a rate of over $4 billion per day! But wait, there is good news! The CBO’s latest 10 year outlook projects the deficit to shrink to only $533 billion by 2014! Don’t be depressed by the fact that $500 billion would still be the higher than any yearly deficit before 2009 or that it will begin rising again the following year. OK, I guess you can be depressed about it. Or be outraged if you wish. And no, the projected decrease in the deficit is not due to cuts in spending. All it will take to cut the deficit to a still historically high level by 2014 is a 93% increase in individual and corporate tax receipts. That should be easy! I’m sure all of you reading this will be paying 93% more by then, won’t you?
Right now, the federal public debt (excluding the various trust funds) is about $10 trillion. This latest CBO 10 year outlook projects that the total public debt will reach $17.4 trillion by the end of 2020. This is higher than their previous outlook last summer that projected a total public debt by 2020 of $16.1 trillion. Government projections are getting worse, not better. Yearly interest on the debt will more than triple by 2020, and will be more than the total we spent on Defense in 2010.
It doesn’t look like a particular Administration or political party has gotten the message yet. The recent State of the Union Address certainly did not suggest any sense of reality. On the plus side, it does seem that some Republicans are finally presenting the debt situation in blunt terms, as are more analysts in the media. However, no representatives have pushed for the type of action needed to actually prevent the coming debt crisis. The debt commission proposals were virtually ignored. Proposals for spending cuts so far have been for insignificant amounts. The will to take necessary action is still not evident. However, still evident is the determination by those dependent on government to loudly voice opposition to the slightest spending cut. It looks like it will take more blunt talk and education of the public. Maybe another election cycle as well. The choice isn’t to cut or not cut. Spending cuts will have to be made sooner or later. Either we cut spending now by choice, or have no choice but to cut a whole lot more later on. That’s the message we have to get out.