October 26, 2014

Posts on national debt

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Monday, March 28, 2011 - 12:00 AM

Updated April 3, 2012

The Government Accountability Office (GAO) recently updated its report on the federal government’s long-term fiscal outlook. The report underscores the serious problems our country faces if it continues on its current fiscal path.

Here are some of the projected milestones for the years ahead, based on one of the scenarios in the GAO's report (the "alternative simulation"* ):

  • 2023 -- Net interest costs would exceed Medicare
  • 2025 -- Federal debt held by the public would exceed the Gross Domestic Product (GDP)
  • 2025 -- Social Security, Medicare, Medicaid and net interest would consume all government revenues.
  • 2029 -- Net interest costs would exceed Social Security
  • 2037 -- Net interest would exceed both Medicare and Medicaid
  • 2038 -- Debt held by the public would exceed 200 percent of GDP
  • 2039 -- The federal deficit would exceed all government revenues.
  • 2046 -- The deficit would reach 22.6 percent of GDP, more than the entire federal budget in 2008 (22.4 percent of GDP).
  • 2047 -- Federal debt held by the public would equal 300 percent of GDP
  • ...
Tuesday, December 28, 2010 - 2:49 PM
With the ink barely dry on a $858 billion tax cut and emergency spending bill, lawmakers were hit with an official reminder last week that steps to rein in the nation’s growing debt cannot be postponed much longer.

According to the 2010 Financial Report of the U.S. Government, released on December 21 by the Treasury Department, “under current policies and the assumptions used in this report the debt-to-GDP ratio will continually increase over the next 75 years and beyond, which means current policies are not sustainable.”

The report further warns, “the longer policy action to avert these trends is delayed, the larger the projected revenue increases and/or spending decreases necessary to reach a target debt-to-GDP ratio.”

These conclusions were contained in a new section of the annual Financial Report titled ”Statement of Long Term Fiscal Projections.” In assessing the present value of projected non-interest spending and revenues over the next 75 years, the report estimates an average gap of 1.9 percent of GDP. Persistent deficits of this magnitude would cause the debt-to-GDP ratio to steadily rise from 62 percent...

Monday, December 6, 2010 - 11:54 AM

By now we've seen a number of proposals for fiscal sustainability from groups with very different perspectives. Some of the harshest critics of the bipartisan deficit-reduction panels are liberal-leaning groups that argue that the recommendations of the President's commission, as well as those of the Bipartisan Policy Center and the MacGuineas-Galston plan, leaned too heavily toward the conservative side and proposed packages that were too heavy on spending cuts and too insistent on keeping taxes (too) low. (I may agree that I would have preferred more revenue increases in the overall mix than the President's commission proposed, but I don't think that should lead me to declare the overall proposal "dead on arrival" or to reject the the individual policies contained within it.)

I've looked at two...

Monday, November 22, 2010 - 5:52 PM

My least favorite argument in deficit reduction debates is that a particular option can’t be chosen because it is too unpopular. If that criterion is strictly applied, we might as well fold our tents and wait for the inevitable fiscal crisis because we’ll never eliminate trillion-dollar deficits with “popular” options.

That message was clearly conveyed last week by the Bipartisan Policy Center’s Debt Reduction Task Force, led by two veterans of past deficit-reduction efforts, Pete Domenici and Alice Rivlin. Their report followed a similarly tough message from Erskine Bowles and Alan Simpson, co-chairs of the President’s bipartisan fiscal commission.

Elected officials have not flocked to embrace these reports and it is easy to see why. They propose spending cuts in popular programs. They challenge cherished tax breaks and raise revenues in the process. They produce howls of protest from powerful interest groups on the political left and right.

But they each do one more thing: They outline plausible paths to a sustainable fiscal policy.

As a member of the Bipartisan Policy Center’s task force, I’m very proud of the resulting report. We worked together in a spirit of cooperation and compromise....

Tuesday, October 19, 2010 - 9:27 AM

As the chair of The Concord Coalition’s Youth Advisory Board, I am always looking for opportunities to highlight why issues of fiscal sustainability and entitlement reform most significantly impact today’s young Americans and future generations. So when Sara Imhof, Concord’s Midwest field director, asked me to speak on a panel with Congressman Paul Ryan and former SEIU President Andy Stern, two members of the President Obama’s fiscal commission, I jumped at the chance.

Prior to the Oct. 12 event, I was fortunate to share a ride with Mr. Stern, and had a few minutes with both him and Congressman Ryan, hearing their perspectives and sharing some of my own. That includes my hope that the commission will use the opportunity in December, when it releases its findings, at least in part as a teaching moment -- an opportunity to shine a light on our nation’s unsustainable fiscal path, the facts of which are undisputed by both major political parties.

I was encouraged to hear Congressman Ryan and Mr. Stern acknowledge not only the gravity of the situation we face, but also the critical need for an “adult” conversation about our policy options going forward.

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Monday, October 4, 2010 - 8:49 AM

In an op-ed article on Sept. 26 in the Des Moines Register, I pointed out that “…regardless of age, socio-economic status or political ideology, we are all affected by inefficiencies in our health system, irresponsible tax and spending policies in Washington, and snowballing government debt.”

I urged average citizens to become more engaged in the search for solutions to our fiscal and economic challenges: “Getting involved is the right thing to do. If we don't take action, who will?”

Well, last week Des Moines rose to the challenge, and then some. People there demonstrated the interest and personal involvement that can help our nation move onto a better, more responsible course. Over the course of 24 hours, about 1200 people in the Des Moines area turned out for events – presented by The Concord Coalition and its partners – that included a health care conference, Rotary Club and Ray Society programs, the Kelly Insurance Center conference and the marquee Fiscal Solutions Tour program at Drake University.

As Concord’s Midwest field director, I appreciate everyone who came out to join us. The civic engagement was fantastic; we had questions and comments from people of all ages and backgrounds. This generated lively discussions that focused on improving social security and health care, specifically, and...

Monday, September 20, 2010 - 10:10 AM

Below are several developments we have been following since the last edition of the Washington Budget Report (sign up here) was published.


FY 2011 REGULAR APPROPRIATIONS: 
With less than two weeks remaining before the beginning of the new fiscal year, Congress has not passed a budget resolution or enacted a single appropriations bill for the coming year.   The House has passed a deeming resolution which could be used to pass the appropriations bills, though the Senate has not passed a similar measure.  Last week the Senate Appropriations Committee completed action on the legislative branch and defense bills. ...

Monday, September 13, 2010 - 3:44 PM

The media is buzzing about how House Minority Leader John Boehner and President Obama might be ready to "compromise" on what to do about the Bush tax cuts.  From a story by Shailagh Murray and Lori Montgomery in Monday's Washington Post:

House Minority Leader John A. Boehner (R-Ohio) surprised Democrats on Sunday when he said he might not oppose President Obama's plan to extend the cuts for all but the wealthiest households, although he reiterated his preference for keeping the lower rates in place for all income groups.

Boehner's comments, made on the CBS program "Face the Nation," altered the landscape of the tax debate by suggesting that Republicans might not obstruct Democratic efforts to raise taxes on the top earners - a move advocated by Obama and many other Democrats as necessary to lowering the record deficit.

But read on in the same story.  Boehner did not say he would support letting the top-end cuts expire.  He said he wouldn't oppose extending all the rest of the tax cuts that President Obama is already proposing to extend:

"If the...

Monday, August 23, 2010 - 2:17 PM

One of my Concord colleagues recently relayed the following "old joke" to me, remarking that a fiscal policy issue we had been discussing reminded him of it.  But when he said it, it reminded me instead of a different fiscal policy issue (and my favorite): the Bush tax cuts and the impending "fork in the road" for them -- whether they will largely endure as the "Obama tax cuts," or whether they will be allowed to expire as scheduled under current law, at least partially and/or eventually.

"Could you loan me ten dollars but just give me five? That way you'll owe me five, I'll owe you five, and we'll be even."

Conveniently, last week the Congressional Budget Office released their update to their budget and economic outlook, so I have some updated numbers for my Bush/Obama tax cuts version of that joke:

President Obama: "Could you loan me ten dollars $2.65 trillion for 10 years' worth of all of the Bush tax cuts but just give me five...

Monday, July 26, 2010 - 4:51 PM

New projections released on Friday afternoon by the Obama administration show that the nation’s finances remain in a deep deficit ditch. This was hardly “news,” but it served as a pointed reminder that much hard work needs to be done to get us back on the road to fiscal sustainability.

In updating the President’s Fiscal Year 2011 budget proposals, the Mid-Session Review (MSR) does not pretend that all will be well once the economy recovers or that getting tough with earmarks and waste will meet the fiscal challenge. The MSR assumes a swift economic recovery and a three-year freeze on non-security appropriations. Yet even with these optimistic assumptions, the budget remains on a path that the administration concedes is unsustainable.

As stated in the MSR Summary, “the economy is still struggling; too many Americans are still out of work; and the Nation’s long-term fiscal trajectory is unsustainable, threatening future prosperity.”

Those looking for good news could point to the fact that the deficit for Fiscal Year 2010, which ends Sept. 30, is now projected to be $1.47 trillion instead of $1.56 trillion. However, a deficit equaling 10 percent of the economy (GDP) as opposed to 10.6 percent is hardly cause for celebration.

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