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U.S. National Debt Soars to New Heights
by John M. Curtis
(310) 204-8700
Copyright
May 11, 2015
All Rights Reserved.
Today’s National Debt of over $18.2 trillion is expected to soar to $40 trillion in only 20 years, threatening the U.S. economy and value of the U.S. dollar. Politicians like Sen. Rand Paul (R-Ky.), subscribing to Carl Menger, Eugen von Bohm-Bawerk and Friedrich von Wieser’s Vienna-based Austrian economics, believe the mushrooming U.S. debt is unsustainable without a major economic collapse. Rand’s father, 79-year-old former Rep. Ron Paul (R-Texas) has been warning of an economic Armageddon because of growing U.S. debt. Word that the national debt could hit $40 trillion without major tinkering in U.S. fiscal policy puts a damper on future GDP growth, hitting only 0.25% in 2015 Q1. Federal Reserve Board and House and Senate committees forecasts for 2015 GDP growth of $3.5 to 4% have stalled. New estimates by the Fed and Congressional Budget Office revise upward by at least $7 trillion 2009 estimates of the U.S. national debt by 2035
Slower than expected recovery from the Great Recession has worsened government revenues, despite improvement in the federal operating budget deficit now estimated for 2015 at $468 billion, down from the dark days of the Great Recession in 2009 of $1.4 billion. Today’s shrinking federal budget deficits stems mostly from the spectacular rise in Wall Street’s major averages, including the Dow Jones Industrials, Nasdaq and S&P 500, all up about 300%. When the market bottomed March 9. 2009, the federal budget deficit was at $1.4 trillion. With the Dow Jones Industrials, Nasdaq and S&P 500 up at near record levels, the 2015 deficit is projected under $500 billion. CBO officials are more worried about the rise in the national debt exceeding $18.2 trillion, after the Federal Reserve Board spent about $13 trillion bailing out the banking and auto industries and three rounds of quantitative easing.
White House and Congressional Republicans have a very different views on how to shrink the the national debt. Republicans, like GOP presidential candidate Sen. Rand Paul (R-Ky.), want to slash government entitlement spending, especially Medicare and Social Security. Expected to rise as the baby boomers retire in coming years, Paul sees no option other than slashing benefits to future generations. Obama has urged raising marginal tax rates 5% on top income earners from today’s 39.6% bracket. Republicans refuse to budge on fiscal policy, tying Obama hands about generating more revenue from taxpayers earning over $500,000 a year. Billionaires, like Omaha, Nebraska-based Berkshire-Hathaway CEO Warren Buffet, have urged Congress to raise rates on millionaires and billionaires. Since there’s no consensus on Capitol Hill, the national debt continues to rise.
Congressional Budget Office projections of a $40 trillion national debt by 2035 have Wall Street nervous. Sen. Rand Paul (R-Ky.) and his 79-year-old former Rep. Ron Paul (R-Texas) are warning of an economic Armageddon all related to a mushrooming national debt. Compared with 2014, when the debt topped $12.8 trillion or 7.4% debt-to-GDP ratio, that same ratio is expected to got to 10.6% in 2035, equaling the biggest debt-to-GDP ratio seen since WWII. With GDP stalling in Q1 at 0.25% GDP, the economy’s flat-lined, dangerously close to recession. CBO and Federal Reserve Board forecasts of 2015 3.5% GDP growth seem unrealistic in today’s sluggish economy. Congressional Republicans blame Obama for slow economic growth for not slashing taxes and reducing government entitlements. Obama can’t get Congress to go along with a much-needed federal jobs program.
Blaming the rising national debt on runaway entitlements, Congressional Republicans have no plan to change fiscal policy. They blame Obama for today’s high tax rates that have stagnated the economy. Spending on Social Security and Medicare is expected to keep rising for the foreseeable future as baby boomers retire. Social Security’s Board of Trustees forecasts the number of taxable workers to rise 20% by 2045, while the number Social Security beneficiaries to rise by 57%, creating an unfounded liability. That same report doesn’t take into account as many as 10-l5 million undocumented workers that currently pay into Medicare and Social Security without any chance of drawing benefits. Social Security and Medicare officials are well-aware of the millions of illegal alien taxpayers who pay into the system but because of their illegal won’t ever get benefits.
With reports of Obama and Senate Majority Leader Mitch McConnell (R-Ky.) getting on the same page with a new trade bill, it’s high time for the two to put their heads together on the economy. While Austrian-economist-leaning politicians like Rand Paul disagree, most mainstream economists believe creating federal jobs with national infrastructure projects would help the economy, especially the struggling middle class. Despite warnings from Nobel-prize-winning economists like Columbia’s Joseph I. Stiglitz, Congressional Republicans have opposed adding federal jobs. What’s becoming abundantly clear is without good-paying federal jobs, the middle class continues to shrink. Congressional Republicans won’t admit that the federal work force helped create the nation’s vibrant middle class. Today’s over-reliance on the private sector has created too many low-paying part-time jobs, hurting the U.S. economy.
About The Author
John M. Curtis writes politically neutral commentary analysing spin in national
and global news. He's editor of OnlineColumnist.com and author of Dodging The
Bullet and Operation Charisma.
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